ABSA Bank Ltd v Certain movable and immovable assets and claims (excluding any liabilities) of A Million Up 105 (Pty) Ltd (016394) [2013] ZACT 35 (27 May 2013)
- Citation
- [2013] ZACT 35
- Status
- Judgment
- Jurisdiction
- South Africa
- Court
- Competition Tribunal
- Panel
- Yasmin Carrim, Andiswa Ndoni, Mondo Mazwai
- Case number
- 016394
More details
- Court
- Competition Tribunal
- Panel
- Yasmin Carrim, Andiswa Ndoni, Mondo Mazwai
- Case number
- 016394
On this page
Professional case brief
Research organized from the available case record
01
Holding and result
The Tribunal found that there is no product overlap between ABSA Bank's residential properties, which target low-income customers, and AMU's luxury penthouses, which target high-income customers. There is also no geographic overlap, as ABSA Bank's comparable properties are located in Gauteng, while AMU's are in the Western Cape. The acquisition is motivated by ABSA Bank's need to recover debt and does not raise competition concerns. The merging parties confirmed that no employment losses would result from the transaction, and no other public interest issues were identified. Accordingly, the Tribunal concluded that the merger is unlikely to substantially lessen or prevent competition and approved it unconditionally.
Court disposition
The proposed merger is approved unconditionally.
Orders
- The merger between ABSA Bank Limited and the assets of A Million Up 105 (Pty) Ltd is approved without conditions.
02
Material facts
Parties
ABSA Bank Limited
Applicant Counsel: ABSA Legal Competition TeamCertain movable and immovable assets and claims (excluding any liabilities) of A Million Up 105 (Pty) Ltd
RespondentAmounts and remedies
- Number of Hotel Rooms Acquired: 129
- Number of Parking Bays Acquired: 167
- Number of Retail Property Units Acquired: 6
- Number of Residential Penthouses Acquired: 7
03
Procedural history
Posture
Merger Approval / Decision
04
Questions and positions
Legal issues
- 01
Whether the proposed merger between ABSA Bank Limited and the assets of A Million Up 105 (Pty) Ltd is likely to substantially lessen or prevent competition in any relevant market.
- 02
Whether any public interest concerns, including employment losses, arise from the transaction.
Party arguments
- Applicant
- ABSA Bank argued that the acquisition of AMU's assets is necessary to recover the money owed to it due to AMU's default on credit facilities. The assets will be resold at market-related prices. ABSA Bank does not intend to retain the hotel long-term and will operate it only until it can be sold. The transaction will not result in employment losses, and there is no product or geographic overlap between the parties' respective property portfolios.
- Respondent
- The liquidators of AMU supported the transaction, stating that the disposal of all assets is required to satisfy the claims of AMU's major creditors. No objections were raised regarding competition or public interest concerns.
05
Court’s reasoning
Legal principles
- 01
Competition Act, No. 89 of 1998
A merger may only be prohibited if it is likely to substantially lessen or prevent competition in any relevant market.
- 02
Competition Act, No. 89 of 1998
Public interest considerations, including employment effects, must be assessed in merger proceedings.
06
Ratio, limits and disposition
Ratio decidendi
The Tribunal found that there is no product overlap between ABSA Bank's residential properties, which target low-income customers, and AMU's luxury penthouses, which target high-income customers. There is also no geographic overlap, as ABSA Bank's comparable properties are located in Gauteng, while AMU's are in the Western Cape. The acquisition is motivated by ABSA Bank's need to recover debt and does not raise competition concerns. The merging parties confirmed that no employment losses would result from the transaction, and no other public interest issues were identified. Accordingly, the Tribunal concluded that the merger is unlikely to substantially lessen or prevent competition and approved it unconditionally.
Obiter and limits
- The Tribunal noted that ABSA Bank does not intend to retain the hotel asset for an extended period and will dispose of it at a market-related price.
- No objections or concerns were raised by any stakeholders regarding the transaction's impact on competition or public interest.
Court disposition
The proposed merger is approved unconditionally.
- The merger between ABSA Bank Limited and the assets of A Million Up 105 (Pty) Ltd is approved without conditions.
Source and reliance status
Competition Tribunal
This page organises the available record for research. Confirm quotations, current status, and subsequent treatment against the official source before relying on the case.
Judgment reading view
Judgment text
The complete available source text.
Competition Tribunal
Judgment
COMPETITION TRIBUNAL
OF SOUTH AFRICA
Case No.: 016394
In the matter between:
ABSA Bank Limited Primary .................................................................Acquiring Firm
and
Certain movable and immovable assets and claims
(excluding any liabilities) of A Million Up 105 (Pty) Ltd .............Primary Target Firm
Panel : Yasmin Carrim (Presiding Member) Andiswa Ndoni (Tribunal Member)
Mondo Mazwai (Tribunal Member)
Heard on : 17 April 2013
Order issued on : 17 April 2013
Reasons issued : 27 May 2013
DECISION
Unconditional approval
On 17 April 2013, the Competition Tribunal (“Tribunal”) unconditionally approved the proposed merger between ABSA Bank Limited and Certain movable and immovable assets and claims (excluding any liabilities) of A Million Up 105 (Pty) Ltd.
The reasons for approving the proposed transaction follow.
Parties to transaction
The primary acquiring firm is ABSA Bank Limited (“ABSA Bank”), a wholly-owned subsidiary of ABSA Group Limited, which provides a diverse range of retail, business, corporate and investment banking services to both individual and corporate clients. ABSA also has a property portfolio comprising of retail, office and industrial space.
The primary target firm consists of certain movable and immovable assets and claims, excluding any liabilities, of A Million Up 105 (Pty) Ltd (“AMU”). AMU acquired credit facilities to develop the 15 On Orange complex from ABSA Bank in 2008. However, AMU failed to comply with its obligations in terms of those credit facilities as a consequence of which ABSA filed for its liquidation.
Proposed transaction and rationale
ABSA Bank will acquire AMU assets comprising immovable assets, movable assets and claims, which include 129 hotel rooms, 167 parking bays, 6 retail property units and 7 residential penthouses.
The rationale for the transaction is for ABSA Bank to recover the money owed to it by AMU by acquiring these assets and reselling them at market-related prices at a later stage.1
The liquidators wish to dispose of all the assets in order to satisfy AMU’s major creditor’s claims
Competition assessment
Both ABSA Bank and AMU are involved in the residential property market, however, ABSA Bank’s residential properties located in the Western Cape are houses aimed at low income earning customers whilst the residential properties of AMU that are being acquired are luxury penthouses aimed at high income earning customers. Therefore, no product overlap arises from this transaction.
The properties which ABSA Bank owns with the closest substitutability possibility to AMU’s luxury penthouses comprise townhouses are located in Gauteng and therefore there is no geographic overlap in respect of the residential properties.
ABSA Bank submitted that it does not intend to keep the hotel for a long period and will therefore continue operating it until ABSA Bank is in a position to sell the hotel at a market-related price.
Public interest
The merging parties confirmed that the proposed transaction will not lead to any employment losses.2
No other public interest issues arise as a result of this transaction.
CONCLUSION
Having regard to the facts above, we find that the proposed transaction is unlikely to substantially lessen or prevent competition in any relevant markets. Accordingly, we approve the proposed merger unconditionally.
____ 27 MAY 2013
YASMIN CARRIM DATE
Andiswa Ndoni and Mondo Mazwai concurring
Tribunal Researcher: Nicola Ilgner
For the Commission: Reabetswe Molotsi
For the merging parties: ABSA Legal Competition Team
1See page 9 of the transcript.
2See pages 5 and 60 of the merger record.
3
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