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COMPETITION TRIBUNAL OF SOUTH AFRICA
Case no: LM091Oct21
Capital Propfund (Pty) Ltd and Inospace (Pty) Ltd (Primary Acquiring Firm)
and
Knoxco 10 Properties (Pty) Ltd (Primary Target Firm)
Heard on: 18 February 2022
Order Issued on: 18 February 2022
Reasons Issued on: 17 March 2022
REASONS FOR DECISION
[1] On 18 February 2022, the Competition Tribunal conditionally approved a large merger
between Capital Propfund Proprietary Limited ("Capital"), Inospace Proprietary Limited
("Inospace") and Knoxco 10 Properties Proprietary Limited.
[2] The primary acquiring firms are Capital and Inospace. The primary acquiring firms are
ultimately controlled by Fortress REIT Limited (“Fortress”) and The Taurus Trust
(“Taurus”), respectively.
[3] The Fortress Group is constituted of property ownership firms, with a portfolio of
immovable properties and rental enterprises in all nine provinces of South Africa.
Fortress' portfolio is spread across the logistics/industrial, retail and office sectors. The
Taurus Group owns industrial, storage and office space in Gauteng through Inospace.
[4] The primary target firm is Knoxco 10 Properties Proprietary Limited (which is to be
known as "Inofort").
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[5] Inofort is a priva te joint venture company formed for purposes of this proposed
transaction and as such currently does not have any activities. Currently, Knoxco is
wholly owned by Mr Mark Antony Fox.
[6] In terms of this transaction, the Fortress group of companies (through Capital, Capital
Propfund 2 Proprietary Limited and Lodestone Investments Proprietary Limited) will
transfer 12 immovable properties and letting enterprises to Inofort. The Taurus group
of companies (through Inospace , Inospace 3 and Phepha Prop 004 Proprietary
Limited) will transfer 8 immovable properties and letting enterprises to Inofort. The
properties transferred by the acquiring firms into Inofort shall be referred to as “the
Target Properties”.
[7] The Competition Commission (“the Commission”) found that the activities of the
merging parties overlap with regard to the provision of industrial property within a
broader node encompassing the adjacent Sandton/Randburg and Roodepoort nodes.
In this market, the Commission found that the Inospace Target Properties have a
market share of approximately 5,62% while the Fortress Target Properties have a
market share of approximately 21,04%. As such, the merged entity will have a post-
merger market share of approximately 26.66%, based on gross lettable area.
[8] The Commission found the market share of the merged entity may nevertheless be
overstated as some properties were not included due to a lack of information.
Regardless, the Commission is of the view that the merging parties will continue to be
constrained by other industrial properties in the market.
[9] The Commission raised a concern about potential information exchange that may arise
as a result of the proposed merger, as the two joint venture partners (being the Taurus
Group and Fortress Group) still operate competing light industrial properties outside
the joint venture.
[10] In order to remedy this potential concern, the merging parties h ave accepted not to
[10] In order to remedy this potential concern, the merging parties h ave accepted not to
appoint directors to the joint venture who are also involved in the operations of Fortress
Group and Taurus’s light industrial businesses; as well as providing non -disclosure
undertakings preventing the sharing of competitively sensitive information between the
joint venture partners Fortress Group and Taurus Group. The merging parties have
agreed to impose these “Chinese wall” limitations as a condition to the approval of the
merger.
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[11] The transaction does not have any effect on employment.
[12] With regard to the promotion the greater spread of ownership, the Commission noted
that currently Inofort does not have any black ownership. Fortress is listed on the JSE,
and its investors include HDI shareholders. At present, Fortress has approximately
15.43% black ownership and is a level 4 B -BBEE contributor. Inospace currently has
approximately 11.91% black ownership. As such post -merger the merging parties
estimate that Inofort will be 12.31% black owned.
[13] There are no other public interest concerns.
[14] We conclude d that the proposed transaction is unlikely to substantially prevent or
lessen competition in any relevant market, or to have a negative impact on the public
interest for the reasons mentioned . In order to remedy the potential information
exchange concern, the proposed transaction is approved subject to the conditions
annexed hereto as Annexure “A”.
17 March 2022
Ms Mondo Mazwai Date
Ms Yasmin Carrim and Mr Andreas Wessels concurring
Tribunal Case Manager: Kameel Pancham
For the Merging Parties: Susan Meyer of Cliffe Dekker Hofmeyr Inc.
For the Commission: Nolubabalo Myoli and Grashum Mutizwa