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[2018] ZACT 59
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Sanlam Life Insurance Limited v Ingenuity Property Investment (Pty) Ltd in respect of five immovable properties and letting enterprises situated in Century City (LM063May18) [2018] ZACT 59 (13 August 2018)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case No: LM063May18
In the matter between:
SANLAM
LIFE INSUARANCE LIMITED
Primary Acquiring Firm
and
INGENUITY
PROPERTY INVESTMENT (PTY) LTD
Primary Target
Firm
IN
RESPECT OF FIVE IMMOVABLE PROPERTIES
AND
LETTING ENTERPRISES SITUATED IN
CENTURY
CITY
Panel
: Norman Manoim (Presiding Member)
: Enver Daniels (Tribunal Member)
: Yasmin Carrim (Tribunal Member)
Heard
on
: 05 July 2018
Order
Issued on : 05 July 2018
Reasons
Issued on : 13 August 2018
Reasons
for Decision
Approval
[1]
On
05 July 2018, the Competition Tribunal ("Tribunal")
unconditionally approved the proposed transaction involving Sanlam
Life Insurance Limited and Ingenuity Property Investment (Pty) Ltd in
respect of five immovable properties and letting enterprises
situated
in Century City.
[1]
[2]
The
reasons for approving the proposed transaction follow.
Parties
to the proposed transaction
Primary
acquiring firm
[3]
The
primary acquiring firm is Sanlam Life Insurance Limited (Sanlam
Life), a private company incorporated in accordance with the
laws of
the republic of South Africa. Sanlam Life is 100% controlled by
Sanlam Ltd, a JSE public listed company.
[4]
Sanlam
Life controls numerous other firms in South Africa.
Primary
target firm
[5]
The
primary target firm is Ingenuity Property Limited (Ingenuity), a
public company incorporated in accordance with the laws of
the
Republic of South Africa. Ingenuity is a JSE listed company focusing
on acquiring and developing commercial properties in the
Western
Cape.
[6]
The
target properties in respect of the proposed transaction are Aurecon
East, Aurecon West, The Gateway, Mazars House and Virgin
Active.
Proposed
transaction and rationale
[7]
The
proposed transaction entails Sanlam Life acquiring the letting
enterprises as a going concern and immovable property. Post-merger
Sanlam Life will exercise control of the Target Properties.
[8]
The
Sanlam Life submits that it has an interest in expanding its property
portfolio and gaining exposure in terms of having a wider
spread of
office, retail and mixed-use properties in Western Cape region.
Ingenuity submits that the proposed transaction is part
of
Ingenuity's strategy to realise growth and provide the firm with an
opportunity to reduce debt and create equity for further
development
in future.
Impact
on competition
[9]
The
Sanlam Group is a financial service group in South Africa engaged in
various services. Relevant to this transaction is the Sanlam
Group's
property portfolio which consists of commercial and industrial
property investment in the Western Cape, Kwa Zulu Natal
and
Gauteng Province.
[10]
Ingenuity is a property investment company with properties
predominately located in Western Cape Province.
Ingenuity's property
portfolio consists of office space, retail space, industrial space,
parking and development property. Ingenuity's
property is managed by
Rabie Property Group (Pty) Ltd.
[11]
The Competition Commission
("Commission") investigated the activities of the merging
parties and found that the proposed
transaction will not result in a
horizontal overlap in the provision of rental and office space and
that there are no vertical
overlap envisaged from the proposed
transaction. Although both firms own properties in the Western Cape,
the Commission found that
the properties of the merging parties are
located in distinct nodes with the acquiring firm's properties
located in Parrow and
the target firm's properties located in Century
City. The Commission found that there is a 30% price difference
between the Century
City and Parrow properties, this is because
Century City is more affluent than Parrow. The Commission concluded
that it is unlikely
that in the event of a 10% price or rent increase
in Parrow, tenants will switch to Century City. Further, the
Commission also
found that there is Goodwood property node in between
Parrow and Century City to which tenants are likely to switch to in
the event
of a rental increase in either Parrow or Century City.
[12]
Given the above, the Commission
concluded that the proposed transaction is unlikely to substantially
prevent or lessen competition
in any relevant market in South Africa.
We concur with this finding.
Public
interest
[13] The
merging parties confirmed that the proposed transaction will not give
rise to any adverse effect
on employment.
[14]
Furthermore, the proposed transaction raises no other public interest
concerns.
Conclusion
[15] In
light of the above, we conclude that the proposed transaction is
unlikely to substantially prevent
or lessen competition in any
relevant market. In addition, no public interest issues arise from
the proposed transaction. Accordingly,
we approve the proposed
transaction unconditionally.
Mr
Norman Manoim
Mr Enver Daniels and Yasmin Carrim
concurring
13 August 2018
DATE
Tribunal Case Manager:
Busisiwe Masina
For
the merging parties: Mr Andries Le Grange of
Cliffe Dekker Hofmeyr
For
the Commission:
Ms Nonhlanhla Msiza
[1]
Aurecon West, Aurecon East, Mazars, the Gateway and Virgin Active.