South Africa Judgment

Competition Tribunal

ABSA Bank Limited v Culemborg Investment Properties (Pty) Ltd (133/LM/DEC08) [2009] ZACT 10 (10 February 2009)

Competition Law Commercial and Corporate Property Merger Substantial Lessening of Competition Public Interest Market Definition

Citation: [2009] ZACT 10
Status: Judgment
Jurisdiction: South Africa
Court: Competition Tribunal
Panel: D Lewis, Y Carrim, N Manoim
Case number: 133/LM/DEC08

More details

Court: Competition Tribunal
Panel: D Lewis, Y Carrim, N Manoim
Case number: 133/LM/DEC08

On this page

Professional case brief

Research organized from the available case record

Source document

Holding and result

The Tribunal found that both Absa and Culemborg own light industrial property suitable for motor vehicle dealerships in Cape Town, but there is no geographic overlap between their operations. Absa's dealership is located in Somerset West, while Culemborg's is in Cape Town CBD, approximately 47 kilometers apart. The market contains a significant number of alternative dealerships, indicating robust competition. The merger will not result in a substantial lessening or prevention of competition in the relevant property sector. No public interest issues were identified. Accordingly, the merger was approved without conditions.

Court disposition

Merger approved without conditions.

Orders

The merger between Absa Bank Limited and Culemborg Investment Properties (Pty) Ltd is approved without conditions.

Material facts

Parties

ABSA Bank Limited

Applicant Counsel: M Griffiths and B Wiese

Culemborg Investment Properties (Pty) Ltd

Respondent

Procedural history

Posture

Merger Application / Approval

Questions and positions

Legal issues

01
Whether the proposed merger between Absa and Culemborg will result in a substantial lessening or prevention of competition in the relevant property market.
02
Whether there are any public interest concerns arising from the merger.

Party arguments

Applicant: Absa argued that the transaction forms part of its broader investment strategy and will not negatively affect competition, as there is no geographic overlap between its property and that of Culemborg. The acquisition will provide Culemborg with additional funding for property development.
Respondent: Culemborg submitted that the transaction would enable it to secure further funding from Absa, facilitating its property development activities. It maintained that the merger would not impact competition due to the lack of overlap in their respective property holdings.

Court’s reasoning

Legal principles

01
Competition Act, No. 89 of 1998

A merger may only be prohibited if it is likely to substantially prevent or lessen competition in any relevant market.
02
Competition Act, No. 89 of 1998

Public interest considerations must be assessed in merger proceedings, but only where relevant factors are present.

Ratio, limits and disposition

Ratio decidendi

The Tribunal found that both Absa and Culemborg own light industrial property suitable for motor vehicle dealerships in Cape Town, but there is no geographic overlap between their operations. Absa's dealership is located in Somerset West, while Culemborg's is in Cape Town CBD, approximately 47 kilometers apart. The market contains a significant number of alternative dealerships, indicating robust competition. The merger will not result in a substantial lessening or prevention of competition in the relevant property sector. No public interest issues were identified. Accordingly, the merger was approved without conditions.

Obiter and limits

The Tribunal noted the importance of considering geographic market overlap in assessing competition effects of property mergers.
The presence of numerous alternative dealerships in the area further mitigates any potential anti-competitive effects.

Court disposition

Merger approved without conditions.

The merger between Absa Bank Limited and Culemborg Investment Properties (Pty) Ltd is approved without conditions.

Source and reliance status

Competition Tribunal

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Judgment text

The complete available source text.

Source document

Competition Tribunal

Judgment

[2009] ZACT 10

COMPETITION TRIBUNAL OF SOUTH

AFRICA

CASE NO: 133/LM/DEC08

In the matter between:

ABSA BANK LIMITED Acquiring Firm

and

CULEMBORG INVESTMENT PROPERTIES (PTY) LTD Target firms

______________

Panel : D Lewis (Presiding Member), Y Carrim (Tribunal Member), and

N Manoim (Tribunal Member)

Heard on : 4 February 2009

Order issued on : 4 February 2009

Reasons issued on : 10 February 2009

REASONS

FOR DECISION

APPROVAL

On 4 February 2009 the Tribunal approved the property merger between Absa and Culemborg. The reasons for the decision follow:

THE PARTIES

The primary acquiring firm is ABSA Bank (âAbsaâ) which is active in the property sector; in retail, residential, industrial and office development. Absa owns motor show rooms in Somerset West Autopark, Cape Town, and another under construction in Krugersdorp Gauteng. The primary target firm is Culemborg Investment Properties (âCulemborgâ) which is 100% owned by Edge Properties, and which is active in the business of property development. Culemborg owns light industrial property which is rented out as a motor show room for new and used vehicles in Cape Town CBD.

THE

TRANSACTION AND RATIONALE

In terms of the proposed transaction Absa intends to acquire 50% of the issued share capital in the business of Culemborg from Edge Properties.

For Absa, the proposed transaction is part of its wider investment strategy. For Culemborg the proposed transaction provides an opportunity to obtain additional funding from Absa to assist in the development of property.

RELEVANT PRODUCT MARKET

Both Absa and Culemborg own light industrial property which is rentable for use by motor vehicle dealerships in Cape Town. However there is no geographic overlap in their activities as Absaâs operational vehicle dealership is in Somerset West and Culemborgâs is in Cape Town CBD. The distance between these dealerships is approximately 47 kilometers and there are a significant number of alternative car dealerships within this location including, Land Rover, Bloomsbury, BMW, Audi Cape Town and Vigilietti Motors.

CONCLUSION

In light of the above, we find that this merger will not result in any substantial lessening or prevention of competition in any of the relevant markets in the property sector. Accordingly, we approve the merger without conditions.

There are no public interest issues.

___ 10 February 2009

N Manoim Date

Tribunal Member

D Lewis and Y Carrim concurring

For the merging parties : M Griffiths and B Wiese of Absa

For the Commission : M Matsimela

(Mergers and Acquisitions)

Tribunal Researcher: L Xaba

Authorities

Authorities used by the court

Cases, legislation, regulations, and constitutional provisions identified in the available record.

Competition Act, No. 89 of 1998

Legislation

Legislation referenced in the available case record.

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