competitiontribunal
SOUTH AFRICA
COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: LM163Mar20
In the matter between:
Flameup Investments (Pty) Ltd Primary Acquiring Firm
And
Festigen Investments (Pty) Ltd in respect of the
letting enterprise known as River Crescent Centre
Primary Target Firm
Panel:
Heard on:
Order Issued on:
Reasons Issued on:
Approval
Mr Enver Daniels (Presiding Member)
Prof. Halton Cheadle {Tribunal Member)
Prof. Fiona Tregenna {Tribunal Member)
08 April 2020
08 April 2020
08 April 2020
REASONS FOR DECISION
[1] On 08 April 2020, the Competition Tribunal unconditionally approved the
proposed merger transaction whereby Flameup Investments (Pty) Ltd intends to
acquire the letting enterprise known as River Crescent Centre, as a going
concern, from Festigen Investments (Pty) Ltd.
[2] The reasons for our approval follow.
Parties to the transaction
Primary Acquiring Firm
[3] Flameup Investments (Pty) Ltd ("Flameup Investments") is a private company
controlled by Oneeighty Holdings (Pty) Ltd ("Oneeighty").
[4]
[5] Flameup Investments is a property holding company and does not control any
firms. Flameup Investments and the firms directly and indirectly controlling it will
be collectively referred to as the "ONE Group".
[6] ONE Group is a property holding, investment and management group with a
portfolio comprising retail, residential and office properties across South Africa.
Of relevance to the proposed transaction is the Witbank Medical Centre which
falls within the ONE Group property portfolio. The Witbank Medical Centre is
situated in Witbank, Mpumalanga and has a total gross lettable area (GLA) of
13 920m2.
Primary Target Firm
[7] River Crescent Centre is controlled by Festigen Investments (Pty) Ltd ("Festigen
Investments"). Festigen Investments is a private company and is controlled by
Gerhard Strydom.
[8] Festigen Investments is a property development and letting company situated in
Mpumalanga. Festigen Investments does not directly or indirectly control any
other firms.
[9] River Crescent Centre is a retail community shopping centre with a total GLA of
24 721m2.
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Proposed transaction
[10] In terms of the proposed transaction, Flameup Investments will acquire the letting
enterprise, River Crescent Centre, as a going concern. Upon implementation of
the proposed transaction, Flameup Investments will exercise sole control of River
Crescent Centre.
[11] ONE Group submitted that the target firm aligned with its investment mandate to
invest in the property market. Festigen Investments submitted that the proposed
transaction represented an opportunity for it to reduce its financial exposure.
Competition Assessment
[12] The Commission investigated the proposed transaction in the market for the
provision of rentable convenience centres within a radius of 10km of River
Crescent Centre, Witbank, Mpumalanga.
[13] For purposes of its assessment the Commission included properties currently
held by ONE Group such as the Witbank Medical Centre, as well as competitors
which fall into the same market as the River Crescent Centre.
[14] The Commission found that post transaction the merged entity would have a
market share of approximately 18% with a market share accretion of
approximately 12%. However, the merged entity would not gain any market
power as they would be constrained by several other players in the market. The
Commission was therefore of the view that the proposed transaction was
unlikely to lessen or prevent competition in the market.
[15] We concur with the Commission's findings and are of the view that the
proposed transaction is unlikely to result in a SLC in the market.
Public interest
[16] The merging parties submitted that no job losses or retrenchments will occur
as a result of the proposed transaction. They submitted that three family related
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employees currently employed by River Crescent Centre would be
accommodated by sister entities in which Mr Strydom is a 100% shareholder.
[17] The Commission contacted employee representatives of both Flameup
Investments and Festigen Investments who raised no concerns regarding the
proposed transaction.
[18] The Commission therefore accepted the merging parties' submissions on
employment. No further public interest concerns were raised.
Conclusion
[19] In view of the above, we concluded that the proposed transaction is unlikely to
result in a SLC in any market. In addition, the proposed transaction will not
result in job losses or have adverse effects on any other public interest
considerations.
[20] We therefore approved the proposed transaction unconditionally.
8 April 2020
Mr Enver Daniels Date
Prof. Halton Cheadle and Prof. Fiona Tregenna concurring.
Tribunal Economist:
For the Merging Partie
For the Commission:
Karissa Moothoo Padayachie
V Chetty of Vani Chetty Competition Law (Pty)
Ltd
N Msiza and M Aphane
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