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COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: LM166Dec20
In the matter between:
Orviscene Proprietary Limited Primary Acquiring Firm
And
Makrogate Limited
Primary Target Firm
Panel: Ms M Mazwai (Presiding Member)
Mr E Daniels (Tribunal Member)
Mr A Wessels (Tribunal Member)
Heard on: 18 December 2020
Order Issued on: 21 December 2020
Reasons Issued on:
06 January 2021
REASONS FOR DECISION
Approval
[1] On 18 December 2020, the Competition Tribunal (“Tribunal”) unconditionally
approved the proposed transaction in which Orviscene Proprietary Limited
(“Orviscene”) intends to acquire, as a going concern, the rental enterprise property
of Makrogate Limited ("Makrogate").
[2] The reasons for the approval of the proposed transaction follow.
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Parties to the transaction
Primary acquiring firm
[3] The primary acquiring firm is Orviscene, a private company incorporated in
accordance with the laws of the Republic of South Africa, controlled by Emerging
African Property Partners Proprietary Limited (“EAPP”) which holds 90%. The
remaining 10% is held by Enigma Property Proprietary Limited . EAPP is in turn
controlled by the Government Employee Pension Fund ("GEPF") (75%) and
Emerging African Property Holdings Proprietary Limited ("EAPH") (25%). GEPF is
controlled by its Board of Trustees in terms of section 6(2) of the Government
Employees Pension Law 21 of 1996 and is duly represented by the Public
Investment Corporation SOC Limited. The shareholders in EAPH are individual
shareholders, none of whom have a controlling interest in EAPH.
[4] The GEPF holds interests in various firm s. Apart from EAPP, EAPH controls
Enigma Empowerment Holdings 1 Proprietary Limited. Orviscene currently does
not c ontrol any firms . EAPP holds interests in industrial propert ies situated in
Gauteng and KwaZulu-Natal.
Primary target firm
[5] The primary target firm is Makrogate, a rental enterprise conducted on Erf 22354
Brackenfell, City of Cape Town (“Target Property”). Makrogate is a property
holding company, in respect of the retail warehouse situated at 14 Belami Avenue,
Brackenfell in the Western Cape province. Makrogate o perates as a landlord,
holding a single property in the Cape Gate Centre in the northern suburbs of Cape
Town, being the Target Property.
[6] The Target Property is subject to a long -term lease in favour of Makro and was
purpose-built for Makro's needs as a large retailer that operates with high volumes
and quick turnover of stock.
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Proposed transaction
Transaction
[7] According to the Sale of Enterprise Agreement, Orviscene will acquire, as a going
concern, the rental enterprise, which includes the Target Property and the seller's
rights and obligations in terms of the leases and contracts as defined in the agreement.
[8] Post transaction, the Target Property will be owned by the Acquiring Group.
Rationale
[9] The Acquiring Group submit s that this transaction aligns with its strategic
objectives and presents an opportunity for it to invest and gain exposure in the
retail property market.
[10] For the target firm, this proposed transaction presents an opportunity for it to divest
of the property in order to realise profits from the entity.
Competition Analysis
[11] The Commission found that there is a product overlap in the provision of rentable
retail property in the Western Cape. The target property is situated in Brackenfell.
The GEPF has three industrial properties in Brackenfell and surrounding areas .
The Commission considered the market shares held by the merging parties in the
market for the provision of rentable light industrial property in Brackenfell and
surrounding nodes within a 15km radius. It found that the merged entity will have
a market share below 10 %. The Commission submitted that there are ample
alternatives in the market.
[12] Therefore, the proposed transaction does not result in any substantial lessening or
prevention of competition in the market under consideration.
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Public Interest
[13] The merging parties submitted that the proposed transaction will not result in any
retrenchments and will not have any negative impact on employment as neither
the acquiring or target firm has any employees.
[14] As such, the proposed transaction did not raise any public interest concerns.
Conclusion
[15] In light of the above, we concluded that the proposed transaction is unlikely to
substantially prevent or lessen competition in the relevant market. Furthermore,
the proposed transaction does not raise any public interest concerns .
Consequently, we approved the transaction unconditionally.
06 January 2021
Ms Mondo Mazwai Date
Mr Enver Daniels and Mr Andreas Wessels
Tribunal Case Managers:
Lumkisa Jordaan and Mpumi Tshabalala
For the Merging Parties: Duduetsang Mogapi and Albert Aukema of Cliffe
Dekker Hofmeyr Inc
For the Commission: Nolubabalo Myoli and Wiri Gumbie