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COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: LM148Jan20
In the matter between
LUVON INVESTMENTS (PTY) LTD Primary Acquiring Firm
And
INVESTEC PROPERTY FUND LTD IN RESPECT OF
THE LETTING ENTERPRISE KNOWN AS
BOITEKONG MALL (PTY) LTD
Primary Target Firm
Panel : Ms M Mazwai (Presiding Member)
: Prof. F Tregenna (Tribunal Member)
: Prof. I Valodia (Tribunal Member)
Heard on : 11 March 2020
Order Issued on : 11 March 2020
Reasons Issued on
: 8 April 2020
REASONS FOR DECISION
APPROVAL
[1] On 11 March 2020, the Competition Tribunal (“Tribunal”) unconditionally
approved a large merger between Luvon Investments (Pty) Ltd and Investec
Property Fund Ltd in respect of the letting enterprise known as Boitekong Mall
(Pty) Ltd.
[2] The reasons for the approval of the proposed transaction follow.
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competitiontribunal
SOUTH AFRICA
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PARTIES TO THE PROPOSED TRANSACTION
Primary acquiring firm
[3] The primary acquiring firm is Luvon Investments (Pty) Ltd (“Luvon ”). Luvon is
ultimately jointly controlled by the FS Moolman Family Trust and the JZ
Moolman Family Trust (the “Moolman Group”).
[4] Luvon controls seven firms. 1 Luvon and the Moolman Group as well as all of
the firms that they control will jointly be referred to as the “acquiring group”.
[5] Luvon is a property investment and development company, investing in various
retail and commercial assets in South Africa. The acquiring group is involved in
the development, management and letting of commercial and retail properties.
Primary target firm
[6] The primary target firm is Investec Property Fund Ltd (“IPF”) in respect of the
letting enterprise known as Boitekong Mall (Pty) Ltd (the “target property”). IPF
is a JSE-listed private company.
[7] IPF is a real estate investment trust . IPF holds a 70% undivided share in the
target property located in Rustenburg, South Africa.
PROPOSED TRANSACTION AND RATIONALE
[8] Luvon currently holds a 30% shareholding in the target property. Luvon intends
to purchase IPF’s 70% undivided share in the target property . Post -merger,
Luvon will have sole control of the target property.
[9] Luvon and IPF have a co -ownership agreement which governs the
management of the target property. After IPF decided to dispose of its shares
1 Westpac Trade & Investment (Pty) Ltd; Orion Properties 104 (Pty) Ltd; Dream World Investments
511 (Pty) Ltd; Luvon Europe Ltd; Banocol (Pty) Ltd; Speciset (Pty) Ltd; PEB Properties (Pty) Ltd.
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in the target property, Luvon elected to exercise its right of first refusal to IPF’s
shares stemming from the co-ownership agreement.
RELEVANT MARKET AND IMPACT ON COMPETITION
[10] The Competition Commission (“Commission”) found a horizontal overlap in the
activities of the merging parties as both operate convenience centres in
Rustenburg. The target property , classified as a community centre ,2 is co -
owned by the parties; while the acquiring group owns Magalies View, classified
as a neighbourhood centre.3 Although the Commission did not conclude on a
relevant market , it assess ed the impact of the proposed transaction in the
market for the provision of rentable retail space in convenience centres within
a 15km radius of the target property.4
[11] During the hearing, the Tribunal sought clarity on why the Commission had
chosen 15km as the radius of their geographic market assessment. The
Commission submitted that although a 15km radius from the target property
was in excess of case precedent for convenience centres, it had assessed this
radius for two reasons.5
[12] The Commission’s first reason was that it had interviewed an anchor tenant in
the target property who indicated that its customers generally come from a
radius of up to 15km . The Commission’s second reason was that if it had
assessed the normative 10km radius, the n the competitive impact of the
acquiring group’s centre (located 12kms away from the target property) would
result in no geographic overlap between the merging parties. The Commission
2 Community centres are convenience centres with a gross leasable area of 12000 – 25000m2.
3 Neighbourhood centres are convenience centres with a gross leasable area of 5000 –12000m2.
4 Convenience centres include community centres, neighbourhood centres etc., which may
competitively constrain each other.
5 Pages 4-5 of the Transcript.
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therefore decided that a c onservative approach was necessary in order to
effectively assess the proposed transaction’s impact on competition.6
[13] When analysing market shares on a geographic market of a 15 km radius, the
Commission found that the merging parties would have a low market share
accretion below 5% and that the merged entity would have a post-merger
market share below 20%.
[14] The Commission further found that the merg ed entity would continue facing
competitive constraints from numerous convenience centres within a 15km
radius of the target property . Additionally, the target property’s tenants and
competitors contacted by the Commission raised no concerns about the
merger.
[15] Due to the above , the Commission concluded that the proposed transaction
was unlikely to substantially lessen or prevent competition in any market. We
found no reason to disagree.
PUBLIC INTEREST
[16] The Commission contacted the employee representatives of the acquiring
group who raised no concerns regarding the proposed transaction. IPF has no
employees. The Commission also found no evidence of planned retrenchments
by the merging parties. Furthermore, t he acquiring group (which currently
manages the target property and its labour activities) submitted that it would
continue to manage the target property as per past practice post-merger.
[17] The Commission found that the proposed transaction was unlikely to raise any
other public interests concerns.
6 The Commission’s papers provided a n additional reason, being that the merging parties had also
recommended assessing a 15km radi us from the target property , as their assessment found that
customers there were willing to travel longer distances to access retailers.
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CONCLUSION
[18] In light of the above, we concluded that the proposed transaction was unlikely
to substantially prevent or lessen competition in any relevant market. In
addition, we are of the view that no public interest concerns arise from the
proposed transaction.
[19] Accordingly, we approved the transaction without conditions.
8 April 2020
Ms Mondo Mazwai Date
Prof. F Tregenna and Prof. I Valodia concurring
Tribunal Case Manager:
P Kumbirai
For the Merging Parties: J Marais of Adams & Adams
For the Commission: R Maphwanya
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