Barkophor Investments Proprietary Limited v Izandla Property Fund Proprietary Limited (LM138Dec23) [2024] ZACT 43 (8 March 2024)
- Citation
- [2024] ZACT 43
- Status
- Judgment
- Jurisdiction
- South Africa
- Court
- Competition Tribunal
- Panel
- A Kessery, A Ndoni, F Tregenna
- Case number
- LM138Dec23
More details
- Court
- Competition Tribunal
- Panel
- A Kessery, A Ndoni, F Tregenna
- Case number
- LM138Dec23
On this page
Professional case brief
Research organized from the available case record
01
Holding and result
The Tribunal found that the proposed transaction does not result in a horizontal or geographic overlap in the market for light industrial property, as the acquiring firm's nearest property is far from the target. The merger will not substantially prevent or lessen competition in the relevant market. There are no public interest concerns, as there will be no retrenchments or job losses, and the transaction promotes HDP shareholding. The merger is therefore approved unconditionally.
Court disposition
Merger approved unconditionally.
Orders
- The proposed transaction is approved without conditions.
02
Material facts
Parties
Barkophor Investments Proprietary Limited
Applicant Counsel: Vani ChettyIzandla Property Fund Proprietary Limited
RespondentAmounts and remedies
- Gross Lettable Area of Target Property: ZAR 17,026
03
Procedural history
Posture
Large Merger / Approval
04
Questions and positions
Legal issues
- 01
Does the proposed merger substantially prevent or lessen competition in the market for light industrial property within the relevant geographic area?
- 02
Does the proposed merger raise any public interest concerns, including employment and spread of ownership?
Party arguments
- Applicant
- Barkophor Investments argued that the acquisition aligns with its investment strategy and will result in increased HDP shareholding. The transaction does not create a geographic overlap, as its nearest property is 168.61 km from the target, and the merger will not negatively affect competition or employment.
- Respondent
- Izandla Property Fund submitted that the sale proceeds will create liquidity for the fund. It has no employees, and property management is outsourced. The merger will not result in retrenchments or job losses, and Excellerate JHI is unlikely to be negatively affected.
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 prevent or lessen competition in the relevant market.
- 02
Competition Act, No. 89 of 1998
Public interest factors, including employment and spread of ownership, must be considered in merger assessments.
06
Ratio, limits and disposition
Ratio decidendi
The Tribunal found that the proposed transaction does not result in a horizontal or geographic overlap in the market for light industrial property, as the acquiring firm's nearest property is far from the target. The merger will not substantially prevent or lessen competition in the relevant market. There are no public interest concerns, as there will be no retrenchments or job losses, and the transaction promotes HDP shareholding. The merger is therefore approved unconditionally.
Obiter and limits
- Excellerate JHI, the current property manager, has a significant national and international presence and is unlikely to be negatively affected by the change in management.
- The Tribunal continues to apply the geographic market definition of a 12km or 15km radius for light industrial property, absent evidence to the contrary.
Court disposition
Merger approved unconditionally.
- The proposed transaction 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.: LM138Dec23
In the large merger between: Barkophor Investments Proprietary Limited Primary Acquiring Firm And Izandla Property Fund Proprietary Limited in Primary Target Firm respect of the letting enterprise known as Sasol DC
Panel:
A Kessery (Presiding Member)
A Ndoni (Tribunal Member)
F Tregenna (Tribunal Member)
Heard on:
13 February 2024
Order issued on:
13 February 2024
Reasons issued on:
8 March 2024
REASONS FOR DECISION
Approval
[1] On 13 February 2024, the Competition Tribunal (“Tribunal”) unconditionally approved the large merger wherein Barkophor Investments Proprietary Limited (“Barkophor Investments”) intends to acquire the letting enterprise known as Sasol DC (“Target Property”) from Izandla Property Fund Proprietary Limited (“Izandla Property Fund”).
Parties to the transaction and their activities
Primary acquiring firm
[2] The primary acquiring firm is Barkophor Investments, a property investment company. Barkophor Investment is 100% controlled by […] Barkophor Investment is 100% owned by historically disadvantaged persons (“HDP”). The HDP shareholdings in Barkophor are held through […].
[3] Barkophor Investments invested in a light industrial property called […].
Primary target firm
[4] The Target Property is owned and controlled by Izandla Property Fund. The Target Property is a light industrial property located at corner of Carbon Street and 8th Avenue, Sasolburg, Free State Province with a GLA of 17 026 m².
Proposed transaction and rationale
Transaction
[5] In terms of the proposed transaction, Barkophor Investments intends to acquire the Target Property from Izandla Property Fund. Following implementation of the proposed transaction, Barkophor Investments will own and control the Target Property.
Rationale
[6] The rationale submitted for the acquiring firm is that the proposed transaction aligns with […].
[7] The rationale submitted for the target firm is that the proceeds from the proposed transaction will be used to create liquidity for Izandla Property Fund.
Competition Assessment
[8] The Commission considered the activities of the merging parties and found that the proposed transaction results in a horizontal overlap in the market for the provision of light industrial property. The Tribunal has previously decided that the relevant geographic market for the provision of light industrial property is within a 12km or 15km radius of the Target Property. In the current case, we did not receive any evidence suggesting a departure from this approach.
[9] The Commission found that the proposed transaction does not result in a geographic overlap as the acquiring group’s closest light industrial property is situated in Welkom, in the Free State Province and is approximately 168.61 km from the Target Property, which is in Sasolburg, in the Free State Province.
[10] The merging parties submit that upon implementation of the proposed transaction, the acquiring group’s market share in the market for rentable light industrial space in the Sasolburg node will change from […]% to […]%.
[11] Having regard to the above, we are satisfied that the proposed transaction is unlikely to substantially prevent or lessen competition in the relevant market.
Public interest assessment
Employment
[12] The proposed transaction will not result in retrenchments or job losses.
[13] Izandla Property Fund has no employees. Its property management functions are provided by Excellerate Real Estate Services Proprietary Limited, trading as Excellerate JHI. Post implementation of the proposed transaction, the Target Property will be managed by Barkophor Investments.
[14] Excellerate JHI has a significant national and international presence in property management services, and it is unlikely to be negatively affected should it not continue to manage the Target Property post-merger.
[15] Based on the above, we find that the proposed merger does not raise any public interest concerns.
Spread of ownership
[16] Barkophor Investment is 100% held by HDPs.
[17] We agree with the merging parties’ submission that the proposed transaction will result in a promotion of HDP shareholding from […]% to 100% post- transaction.
Conclusion
[18] We conclude that the proposed transaction is unlikely to substantially prevent or lessen competition in any relevant market and does not raise any public interest concerns.
[19] We therefore approve the proposed transaction without conditions.
08/03/24
Date
Adv. Anisa Kessery
Ms Andiswa Ndoni and Prof. Fiona Tregenna concurring
Tribunal Case Manager: Princess Ka-Siboto For the Merger Parties: Vani Chetty of Vani Chetty Competition Law (Pty) Ltd For the Commission: Billy Mabatamela and Themba Mahlangu
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