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COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: LM146Jul18
In the matter between
The Investment Corporation of Dubai Primary Acquiring Firm
And
Kerzner International Holdings Limited Primary Target Firm
Panel : Mondo Mazwai (Presiding Member)
: Medi Mokuena (Tribunal Member)
: Anton Roskam (Tribunal Member)
Heard on : 26 September 2018
Order Issued on : 3 October 2018
Reasons Issued on : 16 November 2018
REASONS FOR DECISION
Approval
[1] On 1 October 2018, the Competition Tribunal (“Tribunal ”) unconditionally approved
the proposed transaction involving the Investment Corporation of Dubai (“ICD”) and
Kerzner International Holdings Limited (“KIHL”), hereinafter collectively referred to
as the merging parties.
[2] The reasons for the approval of the proposed transaction follow.
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Parties to the transaction
Primary Acquiring Firm
[3] ICD is an investment company incorporated in accordance with the laws of Dubai,
United Arab Emirates (“Dubai”). ICD is controlled by the government of Dubai. ICD
controls a number of entities in South Africa and internationally . ICD and all its
subsidiaries are hereinafter referred to as the ‘ICD Group’.
[4] The ICD Group is the investment arm of the government of Dubai . The ICD Group
invests in various sectors including the hospitality and leisure sector, and the real
estate sector.
Primary Target Firm
[5] KIHL is jointly controlled by ICD and Colony K-Two Investor, LCC (“Colony”).1 KIHL
controls a number of entities globally. In South Africa, KIHL controls the One & Only
Resorts (Southern Africa) Pty Ltd (“OORSA”) and exercises joint control with ICD
over the One & Only Hotel in Cape Town Holdings (Pty) Ltd (“OOCT Holdings”).
OOCT Holdings ultimately controls and operates the 5-star luxury hotel, One & Only
Hotel Cape Town (“One & Only Hotel ”) which is located in Victoria & Alfred (V&A)
Waterfront.
[6] KIHL is an international developer of destination resorts and luxury hotels. Through
OORSA, KIHL also offers hotel administration to the One & Only Hotel.
Proposed transaction
[7] In terms of the Share Purchase Agreement, the proposed transaction entails ICD -
which currently owns 94% of KIHL’s share capital - acquiring the remaining share
capital (6%) from Colony, which has negative control by virtue of its shareholding .2
Post-merger, ICD will exercise sole ownership and control over KIHL.
1 Colony exercises negative control over KIHL.
2 See Transcript, pg 5.
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Impact on competition
[8] The Competition Commission (“Commission”) found a horizontal overlap between
the activities of the merging parties in the market for the provision of 5 -star luxury
hotel accommodation. In identifying the geographical market, the Commission was
of the view that the scope should be limited to the greater Cape Town City Centre3
as competition between graded hotels is local and this particular area is within a 5km
radius of the One & Only Hotel; but it did not conclude on the relevant geographical
market for reasons below.
[9] The Commission held that the proposed transaction was unlikely to alter the pre -
merger market structure since ICD was merely increasing its shareholding from 94%
to 100%. Furthermore, there are other 5 -star luxury hotels in the Cape Town C ity
Centre that are able to exercise competitive restraints against the merged entity.
[10] Based on the above, the Commission concluded that the proposed transaction was
unlikely to substantially prevent or lessen competition in the relevant market. We see
no reason to differ from the Commission’s conclusion.
Public interest
[11] The merging partie s submitted that the proposed transaction will not have any
negative effects on employment. In the same vein, the Commission confirmed that
the proposed transaction will not result in any retrenchments or job losses.
[12] The Tribunal noted that the South African Commercial, Catering and Allied Workers
Union (“SACCAWU”) indicated that it had not received a copy of the merger filing.
The Commission confirmed that since SACCAWU’s letter, it had subsequently sent
the non-confidential merger notice to SACCAWU and had engaged SACCAWU on
its concerns that the merger would lead to job losses. After clarifying that there would
be no job losses, SACCAWU indicated to the Commission that its concerns had
been addressed.
3 The Cape Town Centre includes the V&A Waterfront.
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[13] The Commission has since provided the Tribunal with the relevant correspondence
which only took place after the merger record was filed with the Tribunal.
[14] 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 prevent
or lessen competition in any relevant market. In addition, no other public interest
concerns arise from the proposed transaction. Accordingly , we approve the
proposed transaction unconditionally.
16 November 2018
Ms Mondo Mazwai Date
Mrs Medi Mokuena and Mr Anton Roskam concurring.
Tribunal Researcher:
Busisiwe Masina
For the merging parties: D Smith of ENSafrica
For the Commission R Ncheche and T Mahlangu