COMPETITION TRIBUNAL OF SOUTH AFRICA
Case no: LM101Oct23
RMB Investments and Advisory (Pty) Ltd Primary Acquiring Firm
And
LM Propco (Pty) Ltd Primary Target Firm
Introduction
Panel : A Wessels (Presiding Member)
: L Mncube (Tribunal Member)
: G Budlender (Tribunal Member)
Heard on : 11 December 2023
Order issued on : 11 December 2023
Reasons issued on : 19 December 2023
REASONS FOR DECISION
[1] On 11 December 2023, the Competition Tribunal (“Tribunal”) unconditionally
approved a large merger in terms of which RMB Investments and Advisory
Proprietary Limited (“RMBIA”) intends to acquire a 100% share in the rental
property known as Leroy Merlin Fourways (“Target Property”) from LM Propco
Proprietary Limited (“LM Propco”).
Parties and Activities
Primary acquiring firm
[2] The primary acquiring firm is RMBIA, a private compan y incorporated in
accordance with the laws of the Republic of South Africa. RMBIA is an
investment company, and its core business is the acquisition and holding of
assets for investment purposes.
[3] RMBIA is wholly owned by FirstRand Investment Holdings Proprietary Limited
("FRIHL"). FRIHL is wholly owned by FirstRand Limited ("FirstRand"), a public
company listed on the Johannesburg Securities Exchange and the Namibian
Stock Exchange.
[4] FirstRand and all the firms controlled by it are collectively referred to below as
the “Acquiring Group”.
[5] The Acquiring Group is a portfolio of integrated financial services businesses
that provide a universal set of transactional, lending, investment and insurance
products and services.
Primary target firm
[6] The primary target firm is LM Propco with respect of a 100% share in the rental
of the Target Property.
[7] LM Propco is a private company incorporated in accordance with the laws of
the Republic of South Africa. LM Propco is wholly owned by Fourways Precinct
Proprietary Limited ("FWP"). FWP is wholly owned by Erilogix Proprietary
Limited ("Erilogix"). Erilogix is wholly owned by
[8] The Target Property is a retail warehouse with a gross lettable area of
approximately 11 300 m². The Target Property houses the operations of a retail
hardware store, trading as Leroy Merlin Fourways.
Proposed Transaction
[9] RMBIA intends to acquire a 100% share in the Target Property from LM Propco.
Upon implementation of the proposed transaction, the Target Property will be
solely controlled by RMBIA.
Competition Assessment
[10] The Competition Commission (“Commission”) found that the proposed
transaction does not raise any horizontal overlap between the activities of the
merging parties since the Acquiring Group does not own any warehouse retail
properties.
[11] Further, the Commission found that the proposed transaction does not give rise
to any vertical overlap.
[12] Based on the above, the proposed merger is unlikely to result in a substantial
prevention or lessening of competition in any market.
Public Interest
Effect on employment
[13] The merging parties submitted that the proposed transaction will not have any
negative effects on employment since the Acquiring firm and the Target
Property do not have any employees. In light of this, the proposed merger is
unlikely to raise employment concerns.
Effect on ownership
[14] The Commission found that the Acquiring Group currently ha s an effective
shareholding by Historically Disadvantaged Persons (“HDPs”) of approximately
28.93%. It further found that the Target Property does not have any
shareholding held by HDPs . Thus, the proposed transaction will result in a
positive impact on HDP ownership in the Target Property.