COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: LM006Apr22
In the matter between:
U Reit Collins Proprietary Limited Primary Acquiring Firm
and
Collins Property Projects Proprietary Limited
Primary Target Firm
[1] On 20 May 2022, the Competition Tribunal (“Tribunal”) unconditionally approved the prior
implemented large merger between U Reit Collins Proprietary Limited (“U Reit”) and
Collins Property Project Proprietary Limited (“Collins”). In terms of the transaction, U Reit
subscribed for 25.7% of the issued share capital in Collins, thus acquiring joint ownership
thereof. The transaction was implemented by the merging parties in and around May
2019 (“Implementation Date”).
[2] The merging parties failed to notify the merger in accordance with section 13A (3) of the
Competition Act.1 This prior implementation has been notified to the Competition
Commission (“Commission”), as a result the Commission is currently engaging the
merging parties on a settlement agreement relating to their failure to notify the
transaction as required by the Competition Act.2
[3] Prior to the Implementation Date, U Reit was active in the leasing of retail and residential
properties located in and around South Africa. Collins, on the other hand, held a portfolio
of retail, office, and industrial properties primarily in Gauteng, Eastern Cape, Northwest,
and KwaZulu Natal provinces.
1 Competition Act No.89 of 1998, as amended.
2 Merger Recommendations, p9 of 25, para [27].
Panel : Y Carrim (Presiding Member)
: E Daniels (Tribunal Member)
: A Ndoni (Tribunal Member)
Heard on : 20 May 2022
Order issued on : 20 May 2022
Reasons issued on : 25 May 2022
REASONS FOR DECISION
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Competition Assessment
[4] The Commission considered the activities of the merging parties at the Implementation
Date and found that both parties were active in the provision of rentable retail space in
convenience shopping centres (neighbourhood) and comparable shopping centres
(community shopping centres). Consequently, there was a product overlap between the
activities of the merging parties in the provision of comparative shopping centres and
convenience shopping centres.
[5] When assessing the effect of the transaction on the provision of convenience shopping
centres, the Commission considered and relied upon Tribunal precedent in Fortress
Income Fund Limited and Capital Property Fund Limited,3 where the Tribunal accepted
the Commission's view that a 10 km radius could be used in assessing competition
between various regional shopping centres or convenience shopping centres. In the
implemented transaction, the Commission found that the merging parties’ convenience
shopping centres are located further than 10km from each other. Therefore, there is no
geographic overlap between the activities of the merging parties in respect of the
provision of convenience shopping centres.
[6] In relation to the assessment of the geographic overlap in the provision of comparative
shopping centres, the Commission considered and relied upon Tribunal precedent in
Growthpoint Properties Ltd and Redefine Properties Limited,4 where the Tribunal agreed
with the Commission that a 15-kilometer radius could be used to assess competition
between distinct comparative centres. The Tribunal further held that comparative centres
within a 15-kilometer radius would constrain each other for competition law purposes.5
In the implemented transaction, the Commission found that U Reit did not own any
comparative shopping centre located within 15km of Collins’ comparative shopping
centre. As a result, there was no geographic overlap between the activities of the
centre. As a result, there was no geographic overlap between the activities of the
merging parties in respect of the provision of comparative shopping centres.
[7] No third parties raised concerns regarding the effects of the implemented transaction on
competition.
Public Interest
Effect on employment
[8] The merging parties submitted that the implemented transaction did not result in any
negative effect on employment and in particular, there were no transaction specific
retrenchments or job losses. The Commission engaged the merging parties’ employee
representatives and confirmed that no concerns were raised by employees in relation to
the transaction.6 The Commission concluded that the implemented merger is unlikely to
result in employment concerns.
[9] We concur with the findings.
Effect on the spread of ownership
[10] The merging parties made no submissions in respect of promoting a greater spread of
ownership for Historically Disadvantaged Persons (“HDPs”) and an Employee Share
Ownership Plan (“ESOP”). Furthermore, the Commission noted that the merging parties
do not have any shareholdings by HDPs or ESOP.
3 Fortress Income Fund Limited and Capital Property Fund Limited, Case No: LM064Jul15.
4 Growthpoint Properties Ltd and Redefine Properties Limited, Case No: LM038Jun13.
5 Merger Recommendations, p20 of 25, para [28].
6 Merger Record, p957 of 960, para [3].
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[11] Given that the transaction was implemented prior to the Competition Amendment Act,7
being signed into law, the Commission did not assess the effect of the implemented
transaction on the promotion of a greater spread of ownership for HDPS and ESOP.
[12] Having considered the above, the Tribunal concludes that the implemented transaction
does not raise any public interest concerns.
Conclusion
[13] We find that the implemented transaction is unlikely to substantially prevent or lessen
competition in any relevant market. Furthermore, the implemented transaction raises no
public interest concerns.
25 May 2022
Mr Enver Daniels
Date
Ms Yasmin Carrim and Ms Andiswa Ndoni concurring
Tribunal Case Managers: Matshidiso Tseki and Sinethemba Mbeki
For the Merging Parties: Susan Meyer and Preanka Gounden of Cliffe Dekker
Hofmeyr Inc.
For the Competition: Innocent Mhlongo and Themba Mahlangu
7 Competition Amendment Act No.18 of 2018.