COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: LM101Aug22
In the matter between:
Community Property Company (Pty) Ltd Primary Acquiring Firms
and
Luvon Investments (Pty) Ltd, Shoprite Checkers
(Pty) Ltd and Falcon Forest Trading 89 (Pty) Ltd in
Respect of Property Situated at the Corner of the N4
and Matthews Phosa Street, Emalahleni,
Mpumalanga (Known as KG Mall)
Primary Target Firm
[1] On 03 October 2022 , the Tribunal unconditionally approved the large merger
whereby Community Property Company (Pty) Ltd (“CPC or Acquiring Group”)1
intends to acquire the rental enterprise known as KG Mall (“Target Property”)
from Luvon Investments (Pty) Ltd (“Luvon”) 2, Shoprit e Checkers (Pty) Ltd
1CPC is ultimately controlled by Old Mutual Limited through its various subsidiaries, which
include Community Property Holdings (Pty) Ltd, Old Mutual Life Assurance Company Limited,
Old Mutual Emerging Markets (Pty) Ltd, and Old Mutual Group Holdings (SA) (Pty) Ltd. CPC
and all the firms controlled by Old Mutual Limited are referred to as “Acquiring Group”.
2 Luvon forms part of The Moolman Group which controls a diversified property portfolio (directly
and indirectly through its subsidiaries) comprised of retail, office, and industrial properties
throughout South Africa.
Panel : S Goga (Presiding Member)
: A Ndoni (Tribunal Member)
: F Tregenna (Tribunal Member)
Heard on : 03 October 2022
Order issued on : 03 October 2022
Reasons issued on : 19 October 2022
REASONS FOR DECISION
(“Shoprite Checkers”) 3, and Falcon Forest Trading 89 (Pty) Ltd (“Falcon
Forest”)4. Post-merger, the Target Property will be controlled by CPC.
The parties
[2] CPC is a property holding and investment firm that specialises in the acquisition
of new and existing shopping centres that serve underserv iced communities
throughout South Africa.5 CPC is ultimately controlled by Old Mutual Limited
through various subsidiaries.
[3] The Target Property is the immovable property and letting enterprise described
as Erf 11250 Kwa -Guqa, Extension 15, Witbank, Mpumalanga, known as KG
Mall, consisting of rentable shopping centre with a total Gross Lettable Area of
21 091m2.
The transaction
[4] The proposed transaction entails CPC acquiring 100% of the Target Property
from Luvon, Shoprite Checkers, and Falcon Forest. The proposed transaction
will thus result in a change of control, with CPC acquiring sole control of the
Target Property.6
[5] The rationale for the transaction is that CPC wishes to grow its investment
portfolio and this transaction provides it with an opportunity to acquire a retail
property in the Emalahleni area. The sellers wish to liquidate their stakes to use
the capital for other purposes.
Competition Assessment
[6] The Commission assessed the merging parties’ activities and found that there
is a horizontal overlap as the parties are both active in the provision of rentable
retail space.
3 Shoprite Checkers is ultimately controlled by Shoprite Holdings Ltd (“the Shoprite G roup”).
The Shoprite Group is a fast-moving consumer goods retailer, with its core business being food
retailing, complemented by furniture, pharmaceuticals, hospitality, ticketing, digital commerce,
financial and cellular services. The Shoprite Group also holds several properties which are
primarily utilised for its own retail stores. The Shoprite Group does not have an interest in any
other properties situated within a 15 km (fifteen kilometre) radius of the Target Property.
other properties situated within a 15 km (fifteen kilometre) radius of the Target Property.
4 Falcon Forest is a property holding company, involved in the management, and letting of retail
property. It does not have an interest in any other properties situated within a 15 km (fifteen
kilometre) radius of the Target Property.
5 Merger Recommendation, p9 of 16, para [14]. CPC invests in retail properties in both township
and rural locations throughout South Africa.
6 Merger Record, p64 of 379, para [2.3].
Market Definition
[7] When defining the relevant market , the Commission considered the
Competition Tribunal’s previously decided case law. In Redefine Properties
Limited and Fountainhead Property Trust Management Limited, Evening Star
Trading 768 (Proprietary) Limited, 7 the Tribunal accepted use of the property
classifications provided by the Investment Property Databank South Africa (Pty)
Ltd (“IPD”) when defining property m arkets, which classifies properties based
on gross lettable area . In Hyprop Investment Limited, Atterbury Investment
Limited, and Attfund Retail Limited and Mantrablox (Pty) Ltd ,8 the Tribunal
accepted that minor regional, regional, and super regional shopping centres fall
into the category of comparative centres and are therefore likely to compete
with each other. However, comparative centres are not likely to be constrained
by centres which fall within other categories, such as convenience centres.9
[8] The Commission found that based on its gross lettable area, the Target
Property falls in the category of community centres. However, it did not reach
a conclusion on the relevant product market.10
[9] According to the merging parties, although the Target Property’s retail space
falls into the category of community shopping centres, it falls to be considered
under the broader product market for the holding and management of rentable
retail properties given the specifics of the market conditions in Emalahleni11
[10] Based on Tribunal precedent which used a 15km radius for assessing
competition between rentable retail properties the Commission and the merging
parties considered a 15km radius for assessing competition.
Competition Assessment
[11] The Commission assessed the effec t of the proposed transaction on the
provision of rentable retail space classified as community shopping centres.
The Commission concluded that there is no geographic overlap between the
merging parties' as the Acquiring Group does not own rentable retail centres in
merging parties' as the Acquiring Group does not own rentable retail centres in
a 15km radius. The closest property is 81km away
[12] The parties further submitted that the Target Property will continue to encounter
competition from a number of other participants in the relevant geographic
market.12
7 Redefine Properties Limited and Fountainhead Property Trust Management Limited, Evening
Star Trading 768 (Proprietary) Limited, Tribunal case number 61/LM/Jun12.
8 Hyprop Investment Limited, Atterbury Investment Limited, and Attfund Retail Limited and
Mantrablox (Pty) Ltd, Tribunal case number: 05/LM/Jan11.
9 Merger Recommendation, p11 of 16, para [19].
10 Merger Recommendation, p11 of 16, para [20].
11 Merger Record, p70 of 379, para [6.2.5].
12 Merger Record, p71 of 379, para [6.3.3].
[13] The Commission therefore concluded that the proposed transaction raises no
competition concerns.
[14] No third-party concerns were raised regarding the transaction.
[15] Having considered the above, the Tribunal is of the view that the proposed
transaction is unlikely to result in substantial prevention or lessening of
competition in any relevant market.
Public Interest
Effect on employment
[16] The Commission considered whether the proposed transaction would have an
adverse effect on employment. According to the merging parties, the proposed
transaction will have no adverse impact on employment. Specifically, no
retrenchments will occur because of the proposed merger .13 Furthermore, the
current employee will be taken over by CPC following the proposed merger's
implementation.14
[17] The Commission engaged wi th Ms Nicole Matthews as the Acquiring Group's
employee representative and Ms Lucille Kotze as the Target Property's
employee representative. No concerns were raised by the respective employee
representatives.15
[18] The Commission concluded that proposed tra nsaction is unlikely to raise
employment concerns.
Effect on the spread of ownership
[19] The Acquiring Group has approximately 39.47% shareholding by historically
disadvantaged individuals ("HDPs") while the Target Property does not have
any HDP shareholders. According to the merging parties, the proposed merger
will result in the Target Property being a part of a company in which HDPs owns
39.47% of the shares. 16 The Commission concluded that the proposed
transaction does not raise any other public interest concerns.
Conclusion on public interest
[20] In light of the above, the Tribunal concludes that the proposed transaction is
unlikely to have an adverse effect on public interest.
13 Merger Recommendation, p12 of 16, para [25].
14 Merger Recommendation, p12 of 16, para [26].
15 Merger Recommendation, p13 of 16, para [27].
16 Merger Record, p73 of 379, para [9.3]
Conclusion
[21] Having considered the evidence before it, the Tribunal found that the proposed
transaction is unlikely to lead to substantial prevent ion or lessen ing of
competition in any relevant mark et. Furthermore, the transaction raises no
public interest concerns.
19 October 2022
Presiding Member
Ms Sha’ista Goga
Date
Concurring: Mrs Andiswa Ndoni and Professor Fiona Tregenna
Tribunal Case Managers: Sinethemba Mbeki
For the Merging Parties: Misha Van Niekerk of Adams and Adams
Attorneys
For the Competition: Innocent Mhlongo and Themba Mahlangu