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COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: LM088Aug22
In the matter between:
Emira Property Fund Ltd Primary Acquiring Firm
and
Transcend Residential Property Fund Ltd Primary Target Firm
Introduction
[1] On 7 October 2022, the Competition Tribunal (“Tribunal”) unconditionally
approved the large merger in which Emira Property Fund Ltd (“Emira”) intends to
acquire all of the remaining shares in Transcend Residential Property Fund
(“Transcend”).
Primary acquiring firm
[2] Emira, a property investment fund which is listed on the Johannesburg Stock
Exchange (“JSE”), is controlled by I Group Financial Holdings (Pty) Ltd (“I Group
Financial”)1.
Panel : M Mazwai (Presiding Member)
: A Wessels (Tribunal Member)
: L Mncube (Tribunal Member)
Heard on : 07 October 2022
Order issued on : 07 October 2022
Reasons issued on : 04 November 2022
REASONS FOR DECISION
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[3] Emira invests in a diversified portfolio of commercial and retail assets in major
South African metropolitan areas and also holds a controlling interest in a rural
retail portfolio through its interest in Enyuka Prop Holdings (Pty) Ltd.
[4] Emira is controlled by the I Group, which controls a diversified property portfolio
comprised of retail, office, industrial and residential properties throughout South
Africa.
Primary target firm
[5] Transcend is a JSE -listed entity and is not directly or indirectly controlled by
another firm.
[6] Transcend's primary business is the letting of residential property developments
situated within the Western Cape and Gauteng and owns a portfolio of high -
quality residential properties, servicing the low-to-middle income market.
Competition Assessment
Relevant product market
[7] There is an overlap between in the activities of the merging parties in residential
properties in the Western Cape.
[8] The Commission assessed the activities of the merging parties in the market for
the provision of residential properties. It defined the market in line with the
Tribunal’s decisions in Arrowhead Residential Limited and Jika Properties (Pty)
Ltd2 and Government Employees Pension Fund and Another v Lexshell 44
General Trading (Pty) Ltd 3 whereby the Tribunal accepted the Commission’s
definition of the market as the market for residential properties.
Relevant geographic market
[9] The Commission, relying on the geographic market definition in Presmooi (Pty)
2 Tribunal Case No: 020198.
3 Tribunal Case No: 16/LM/Mar11.
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Ltd,4 found that residential properties located 8 kms apart do not pose a
competitive constraint on each other, suggesting that the geographic market
could be narrow, encompassing a radius of less than 8 kms.5
[10] The Commission analysed the distance between the merging parties’ rentable
space in residential properties and found that the y have an overlap in Western
Cape as the merging parties’ properties in Eerste River, Western Cape and De
Velde, Western Cape had a distance of 5.7 kms and 5.6 kms respectively.
Market shares
[11] The Commission found that post -merger the merging parties will own two
properties within an 8 kms radius , in Eerste River, Western Cape, with 185
residential units available .6 It found that , according to online searches on
Property24, there are about 600 residential properties available in Eerste River.
Further, it found the property held by the acquiring firm in Eerste River is still
under construction and this property will consist of 85 houses with two bedrooms,
and ten houses with one bedroom. In contrast, the property held by the target
firm, namely Alpine Mews (90 units) are all apartments, and all are 2 bedroomed
units.7
[12] In De Velde, Western Cape; post -merger the merging parties will also own two
properties within an 8 kms radius with 79 units available. Property24 has listings
for approximately 900 residential properties in De Velde and the surrounding
areas. Further, the target firm’s property, De Velde (59 units), is held for sale, by
contrast the acquiring group’s properties are all held for rent.8 This indicates that
there is likely to be minimal competition between the parties in De Velde.
4 Presmooi (Pty) Ltd, Savyon Building (Pty) Ltd and IPS Investments (Pty) Ltd and Drystone
Investments (Pty) Ltd, Prophold Ltd, Odeon Investments (Pty) Ltd and Adamax Property Projects,
Persequor Park (Pty) Ltd Tribunal Case No: 016527.
5 The merging parties submitted that although a radius of 8 kilometres (“km s”) is comm only
5 The merging parties submitted that although a radius of 8 kilometres (“km s”) is comm only
attributed to the relevant geographic market in respect of the letting of residential properties, they
expanded this to 10 km s to account for properties which would otherwise fall just outside of the
radius, as per the Tribunal’s decision in AFHCO Holdings (Pty) Ltd and Calgro M3 JCO Holdings
(Pty) Ltd.
6 The Commission could not find any confirmed and/or published information on gross lettable
area (“GLA”) or the number of units for residential properties which could assist in determining
the merging parties’ est imated market shares. The Commission relied on the merging parties’
submissions and also supplemented the information with online searches.
7 Page 502 of Merger Record.
8 Page 502 of Merger Record.
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[13] The Commission did not conclude on the market shares and accretion.
[14] Having considered the above , the Tribunal concluded that it is unlikely that the
proposed merger will result in a substantial prevention or lessening of competition
in any relevant market.
Public Interest
Effect on employment
[15] The merging parties submit that the implementation of the proposed transaction
will not have any negative impact on employment and there will be no job losses
nor changes to employment conditions, as a result of the proposed transaction.
[16] The Commission found that the employees of Emira are not unionised. The
employee representative 9 of Emira confirmed that all the employees that they
represent were notified of the proposed transaction and that they did not raise
any objections or concerns in connection with the proposed transaction.
Transcend has no employees as it is an investment holding company which is
operated through an outsourced management agreement with I nternational
Housing Solutions (RF) (Pty) Ltd.
[17] Accordingly, the proposed transaction is unlikely to raise employment concerns.
Effect on the spread of ownership
[18] The merging parties submit ted that the proposed transaction will result in the
promotion of broad-based black economic empowerment (“ B-BBEE”) as Emira
has a B-BBEE rating of Level 2 Contributor with black ownership percentage of
71.15% and a black woman ownership percentage of 7.41%. Transcend does
not currently have a B-BBEE rating.
[19] The Commission conclude d that the proposed transaction is unlikely to have a
negative impact on the promotion of greater spread of ownership.
9 Page 500 of Merger Record.
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Other public interest issues
[20] The proposed transaction raised no other public interest concerns.
Third Party Views
[21] No third party raised any concerns.
Conclusion
[22] Having considered the above, we conclude that the proposed transaction is
unlikely to substantially prevent or lessen competition in any relevant market.
Furthermore, the proposed transaction does not have a negative impact on the
public interest.
04 November 2022
Ms Mondo Mazwai Date
Mr Andreas Wessels and Professor Liberty Mncube concurring
Tribunal Case Manager: Juliana Munyembate
For the Merging Parties: Misha van Niekerk of Adams & Adams
For the Commission: Horisani Mhlari and Ratshidaho Maphwanya