COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: LM180Feb23
In the matter between:
Community Property Company (Pty) Ltd Acquiring Firm
and
Luvon Investments (Pty) Ltd and Twin City (Pty) Ltd
in respect of Sam Ntuli Mall
Target Firm
Approval
[1] On 21 April 2023, the Competition Tribunal (“Tribunal”) conditionally approved the large
merger whereby Community Property Company (Pty) Ltd (“CPC”) will acquire the retail
property letting enterprise known as Sam Ntuli Mall from Luvon Investments (Pty) Ltd
(“Luvon Investments”) and Twin City (Pty) Ltd (“Twin City”). Post-merger, CPC will
exercise sole control of the Target Firm.
Parties to the transaction and their activities
Primary acquiring firm
[2] The primary acquiring firm is CPC, which is wholly owned by Community Property
Holdings (Pty) Ltd (“CPH”). CPH is, in turn, controlled by Old Mutual Life Assurance
Panel: Geoff Budlender (Presiding Member)
Thando Vilakazi (Tribunal Member)
Fiona Tregenna (Tribunal Member)
Heard on: 21 April 2023
Order issued on: 21 April 2023
Reasons issued on: 18 May 2023
REASONS FOR DECISION
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Company Limited (“Old Mutual Life Assurance”) (as to %). 1 Old Mutual Life
Assurance is a wholly owned subsidiary of Old Mutual Emerging Markets (Pty) Ltd
(“OMEM”). OMEM is controlled by Old Mutual Group Holdings (SA) (Pty) Ltd which is
a wholly owned subsidiary of Old Mutual Limited (“Old Mutual”). Old Mutual is listed on
the Johannesburg Stock Exchange and is not directly or indirectly controlled by any
firm.
[3] All the firms directly or indirectly controlled by Old Mutual are referred to as the
“Acquiring Group”.
[4] CPC does not control any firm. The Acquiring Group’s activities relevant to the
proposed transaction include its property holdings in Gauteng. The Acquiring Group’s
property portfolio consists of property classified as retail, residential, industrial and office
space situated across South Africa.
Primary target firm
[5] The primary target firm is the retail property letting enterprise known as Sam Ntuli Mall
(the “Target Property”), situated in Gauteng, Katlehong. Luvon Investments and Twin
City each hold a 50% undivided share in the Target Property and are collectively
referred to as the “Sellers”.
[6] The Target Property has a gross lettable area of 30 274m² and is classified as a small
regional shopping centre.
Proposed transaction and rationale
Transaction
[7] In terms of the proposed transaction, the Acquiring Group will acquire the Target
Property in its entirety, from the Sellers. Upon implementation, the Acquiring Group will
exercise sole control of the Target Property.
Rationale
[8] According to the Acquiring Group, the acquisition of the Target Property would present
CPC with an opportunity to grow its investment portfolio. The Target Property has a
1 .
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good presence of large and listed tenants and national brands, most of which are within
their initial lease period, and which can further serve the local community.2
[9] The Sellers submitted that the proposed transaction allows them to realise their share
values in the Target Property at a market related price, which would then free up capital
to utilise in other investments.3
Relevant market and impact on competition
[10] The Competition Commission (“Commission”) considered the activities of the merging
parties and found that the proposed merger raises a horizontal overlap as the parties
are both active in the provision of rentable retail property.
Horizontal assessment
Product market
[11] The South African Property Owners Association (“SAPOA”) categorises shopping
centres according to gross lettable area (“GLA”) as follows4:
Shopping Centre Type GLA
Neighbourhood 5 000m² – 12 000m²
Community 12 000m² – 25 000m²
Small Regional 25 000m² – 50 000m²
Regional 50 000m² – 100 000m²
Super Regional More than 100 000m²
[12] As mentioned above, the Target Property has a GLA of 30 274m². This is under
50 000m² and therefore, according to the SAPOA classification, falls within the small
regional shopping centre category.
[13] However, the Commission did not solely rely on GLA as the only determining factor in
considering substitutability in this instance5. Based on the horizontal overlap identified,
2 Merger Record, p65
3 Merger Record, p65
4 Table from merging parties Joint Competitiveness Report para 6.2.2. (Merger Record, p69)
5 This was also the approach taken in Hyprop Investments Limited, Atterbury Investment Limited, Attfund Retail
Limited, and Mantrablox Proprietary Limited (Tribunal Case Number: LM092Jan11)
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the Commission considered Tribunal precedent6, where it was found that free standing,
convenience centres, community centres, neighbourhood centres and local
convenience centres may provide a direct competitive constraint to each other and as
such, can fall within a single market of convenience centres. Furthermore, small
regional, regional, and super regional centres may provide a direct competitive
constraint to each other and fall within a single market of comparative centres
(“Comparative Centres”).
[14] The Commission did not conclude on the relevant product market. However, it
assessed the impact of the proposed transaction in the provision of comparative
centers.
Geographic market
[15] The Commission relied on Vukile/NAD, where it was established that the appropriate
scope of assessment for the provision of Comparative Centres was a radius of at least
15km.
[16] Having regard to the above, the Commission, without concluding on the relevant
market, assessed the competitive effects of the proposed transaction in the provision of
rentable Comparative Centres within a 15km radius of the Target Property.
Horizontal impact
[17] The Commission found that the Comparative Centre nearest to the Target Property,
within the Acquiring Group’s portfolio, is in Heidelberg, Gauteng, which is situated
approximately 34km away from the Target Property. As this falls out of the 15km
geographic scope, the Commission concluded that the proposed transaction does not
result in any overlap in the provision of Comparative Centers.
[18] For completeness, the Commission found that the Acquiring Group owns a community
shopping centre measuring approximately 11 000m². Following case precedent
outlined above, this is not substitutable from a product market perspective, however the
Commission considered whether there are alternative market players in the broad
market for all rentable retail properties. In this regard, the Commission found at least
market for all rentable retail properties. In this regard, the Commission found at least
6 Vukile Property Fund Limited and NAD Property Income Fund Proprietary Limited, in respect of Batho Plaza
and Moruleng Mall (“Vukile/NAD”) (Tribunal Case Number: LM197Feb15)
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five alternative rentable retail properties within a 5km radius of the Target Property.
These include Katlehong Crossing, Mpilo Shopping Centre, Thokoza Value Centre,
Letsoho Shopping Centre, and Motse wa Lijane Shopping Centre. In a wider radius of
5km – 10km from the Target Property, there are further alternatives such as Chris Hani
Mall (8km), Sky City Mall (9km), Bracken Gardens Shopping Centre (9km) and
Mayberry Park (9km).
[19] Considering the above, we agree with the Commission’s conclusion that the proposed
transaction is unlikely to give rise to any significant unilateral concerns in the markets
assessed.
Exclusivity
[20] The Commission identified an exclusivity clause in the Target Property’s lease
agreement in favour of Pick n Pay, which contains the following exclusivity provisions
as well as Pick n Pay having a say in relation to who may occupy the Target Property
as well as the amount of space that should be allocated to other retailers:
[21] Pick n Pay entered into a consent agreement with the Commission, following
recommendations made by the Commission in the Grocery Retail Market Inquiry
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(“GRMI”), regarding lease agreements containing exclusivity provisions. In terms of the
consent agreement7, Pick n Pay agreed to –
[22] However, as stated above, in terms of Pick n Pay’s consent agreement with the
Commission, exclusivity provisions will only cease to be enforced with effect from 31
December 2026 against other supermarkets and large liquor stores.
[23] The Commission therefore engaged with the merging parties regarding the removal of
the exclusivity clause. The merging parties were amenable to this suggestion and have
agreed to the removal of the exclusivity clause, and this removal is imposed herein as
a condition to the approval of the proposed transaction.
[24] Having regard to the above and the inclusion of the exclusivity condition, we agree with
the Commission’s conclusion that the proposed transaction is unlikely to substantially
prevent or lessen competition in the relevant market.
Public interest
Employment
[25] The merging parties have provided an unequivocal undertaking that the proposed
transaction will not result in any negative employment effects.
[26] The Commission found that the Target Property is managed by the Moolman Group
Property Management (Pty) Ltd, a subsidiary of one of the Sellers, Luvon Investments.
Post-merger, the merging parties submitted that the Target Property will be managed
by Capital Land Asset Management (Pty) Ltd.
7 https://www.comptrib.co.za/info-library/case-press-releases/tribunal-confirms-consent-agreement-pick-n-pay-
exclusivity-provisions-in-lease-agreements-immediately-scrapped-against-privately-black-owned-supermarkets-
small-businesses-and-speciality-stores
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[27] The Commission engaged a representative of the Target Property, who confirmed that
no concerns had been raised by employees in relation to the proposed transaction.
Furthermore, the representative confirmed that the change in property management will
not result in any negative employment consequences.
[28] Considering the above, and that the merging parties have provided an unequivocal
statement that no job losses will arise as a result of the proposed transaction, we agree
with the Commission’s findings that the proposed merger is unlikely to have a negative
effect on employment.
Spread of ownership
[29] The Commission found that the Acquiring Group, through Old Mutual, has an ownership
of % held by historically disadvantaged persons (“HDPs”), while the Sellers do not
have any HDP shareholding.
[30] The Commission found that the proposed transaction promotes a greater spread of
HDP ownership through the introduction of shareholding by the Acquiring Group.
[31] Furthermore, the Commission found that the proposed transaction does not raise any
other public interest concerns, and the Tribunal concurs.
Conclusion
[32] In light of the above, the Tribunal found that the proposed transaction is unlikely to
substantially prevent or lessen competition in any relevant market and does not raise
any public interest concerns. We approved the proposed transaction subject to the
conditions set out in Annexure A.
18 May 2023
Geoff Budlender SC Date
Concurring: Prof Fiona Tregenna and Dr Thando Vilakazi
Tribunal case manager: Leila Raffee
For the merging parties: Misha van Niekerk of Adams & Adams
For the Commission: Nonhlanhla Msiza and Wiri Gumbie