Community Property Company (Pty) Ltd v Boitekong Mall C/O Luvon Investments (Pty) Ltd (LM013Apr24) [2024] ZACT 21 (28 June 2024)
- Citation
- [2024] ZACT 21
- Status
- Judgment
- Jurisdiction
- South Africa
- Court
- Competition Tribunal
- Panel
- M Mazwai, I Valodia, A Ndoni
- Case number
- LM013Apr24
More details
- Court
- Competition Tribunal
- Panel
- M Mazwai, I Valodia, A Ndoni
- Case number
- LM013Apr24
On this page
Professional case brief
Research organized from the available case record
01
Holding and result
The Tribunal found that the proposed merger between Community Property Company (Pty) Ltd and Boitekong Mall C/O Luvon Investments (Pty) Ltd does not result in a substantial prevention or lessening of competition, as there is no geographic overlap between the parties' convenience shopping centres. The Tribunal also considered the property sector's high merger activity and noted the importance of monitoring creeping mergers, although no immediate concerns arose in this case. The transaction does not negatively affect employment, and it increases HDP ownership in the Target Property, thereby advancing public interest objectives. Accordingly, the merger was approved without conditions.
Court disposition
Merger approved without conditions.
Orders
- The large merger between Community Property Company (Pty) Ltd and Boitekong Mall C/O Luvon Investments (Pty) Ltd is approved.
- No conditions are imposed on the approval of the merger.
02
Material facts
Parties
Community Property Company (Pty) Ltd
Applicant Counsel: Misha Van NiekerkBoitekong Mall C/O Luvon Investments (Pty) Ltd
RespondentAmounts and remedies
- Gross Lettable Area of Gateway Mall: ZAR 9,080
- Gross Lettable Area of Boitekong Mall: ZAR 17,649
- HDP Ownership Percentage in CPC: ZAR 28.64
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 relevant market.
- 02
Does the transaction raise any public interest concerns, including employment and spread of ownership.
- 03
Is there a risk of market concentration through creeping mergers.
Party arguments
- Applicant
- The applicant argued that the proposed transaction would not negatively impact competition, as there is no geographic overlap between the shopping centres owned by the merging parties. They further submitted that there would be no adverse effect on employment, with no job losses or changes to employment conditions, and that the transaction would promote HDP ownership in the Target Property.
- Respondent
- The respondent, represented by the Competition Commission, found a horizontal overlap in the provision of rentable convenience shopping centres but concluded there was no geographic overlap, as the nearest centre owned by the Acquiring Group is 104 km away. The Commission noted the property sector's high merger activity and recommended future consideration of creeping mergers. No public interest concerns were identified.
05
Court’s reasoning
Legal principles
- 01
Competition Act, Section 12A
A merger is unlikely to substantially prevent or lessen competition if there is no geographic overlap between the parties' operations.
- 02
Competition Act, Section 12A(2)(k)
The assessment of creeping mergers requires consideration of previous merger activity by the parties within a stipulated period.
- 03
Competition Act, Section 12A(3)
A transaction that increases HDP ownership in the target entity promotes the spread of ownership and serves the public interest.
- 04
Competition Act, Section 12A(3)(b)
Employment effects must be considered, and transactions that do not result in job losses or adverse changes to employment conditions do not raise public interest concerns.
06
Ratio, limits and disposition
Ratio decidendi
The Tribunal found that the proposed merger between Community Property Company (Pty) Ltd and Boitekong Mall C/O Luvon Investments (Pty) Ltd does not result in a substantial prevention or lessening of competition, as there is no geographic overlap between the parties' convenience shopping centres. The Tribunal also considered the property sector's high merger activity and noted the importance of monitoring creeping mergers, although no immediate concerns arose in this case. The transaction does not negatively affect employment, and it increases HDP ownership in the Target Property, thereby advancing public interest objectives. Accordingly, the merger was approved without conditions.
Obiter and limits
- The Tribunal highlighted the need for the Commission to monitor creeping mergers in the property sector due to consistently high levels of merger activity.
- The transaction contributes positively to the spread of HDP ownership in the property sector.
Court disposition
Merger approved without conditions.
- The large merger between Community Property Company (Pty) Ltd and Boitekong Mall C/O Luvon Investments (Pty) Ltd is approved.
- No conditions are imposed on the approval of the merger.
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: LM013Apr24
In the matter between: Community Property Company (Pty) Ltd Acquiring Firm And Boitekong Mall C/O Luvon Investments (Pty) Ltd Target Firm
Panel: M Mazwai (Presiding Member) I Valodia (Tribunal Member) A Ndoni (Tribunal Member) Heard on: 5 June 2024 An order issued on: 5 June 2024 Reasons issued on: 28 June 2024
REASONS FOR DECISION
Approval
[1] On 5 June 2024, the Competition Tribunal (“Tribunal”) approved the large merger wherein Community Property Company (Pty) Ltd (“CPC”) intends to acquire Boitekong Mall and the associated letting enterprise (“Target Property”) from Luvon Investments (Pty) Ltd (“Luvon”). Post-merger, CPC will solely control the Target Property.
Parties to the transaction and their activities
Primary acquiring firm
[2] CPC is ultimately controlled by Old Mutual Limited, a public company listed on the Johannesburg Stock Exchange. CPC is a property holding and investment company specialising in acquiring new and existing shopping centres that cater to the needs of underserviced communities throughout South Africa. All firms directly and indirectly controlled by CPC and Old Mutual Limited are called the “Acquiring Group”.
Primary target firm
[3] The Target Property is wholly owned by Luvon, which is ultimately controlled by the Moolman Group. The Target Property is a convenience shopping centre situated at the corner of R510 and Lalabhai Dudhia Drive, Boitekong, Rustenburg, North-West Province.
Relevant market and impact on competition
[4] The Competition Commission (“Commission”) found that the proposed merger raises a horizontal overlap as the parties are both active in the provision of rentable convenience shopping centres. The convenience shopping centre owned by the Acquiring Group is Gateway Mall in Carletonville, Gauteng with a Gross Lettable Area (“GLA”) of 9080m2. The convenience shopping centre of the Target Property has a GLA of 17649 m2. However, the Commission found no geographical overlap in the market of rentable convenience shopping centres since the Acquiring Group’s nearest rentable convenience shopping centre is located in Carletonville, Gauteng Province, approximately 104 km away.
[5] Given that, we conclude that the proposed transaction is unlikely to substantially prevent or lessen competition as there is no geographic overlap between the rentable convenience shopping centres of the merging parties.
Creeping Mergers
[6] Section 12A(2)(k) requires the Commission to assess any other mergers engaged in by a party to a merger for a stipulated time period. The property sector appears to consistently have relatively higher levels of merger activity. In the current transaction, the Tribunal noted that CPC notified three transactions in the previous three years but this was not disclosed in the proposed transaction.[1] In light of merger activity in the sector, the Commission should in future consider potential concentration through creeping mergers.
Public interest
Employment
[7] According to the merging parties, the proposed transaction will not negatively impact employment, as there will be no job losses or changes to employment conditions. The employee representatives of both the Target Firm and the Acquiring Group have confirmed that they were notified of the proposed transaction, and no employees have raised any concerns.
Spread of ownership
[8] The Target Property currently has no Historically Disadvantaged Persons (“HDPs”). CPC has a 28.64% HDP ownership. As a result of the proposed transaction, the Target Property will have HDP ownership. The transaction therefore contributes towards the promotion of a greater spread of ownership by HDPs.
[9] We conclude that the proposed transaction does not raise any public interest concerns.
Conclusion
[10] For the reasons above, we conclude that the proposed transaction is unlikely to substantially prevent or lessen competition in the relevant market, or to have a negative impact on the public interest.
27 June 2024
Date
Ms Mondo Mazwai
Concurring: Ms Andiswa Ndoni and Prof lmraan Valodia
Tribunal case manager: Moleboheng Mhlati For the merging parties: Misha Van Niekerk of Adams & Adams For the Commission: Beverley Chomela and Raksha Darji
[1] Community Property Company (Pty) Ltd and Luvon Investments (Pty) Ltd and Twin City (Pty) Ltd in respect of Sam Ntuli Mall LM180Feb23, Community Property Company (Pty) Ltd and Luvon Investments (Pty) Ltd, Shoprite Checkers (Pty) Ltd and Falcon Forest Trading 89 (Pty) Ltd in respect to Property situated at the corner of the N4 and Matthews Phosa Street, Emalahleni Mpumalanga (known as KG Mall) LM101180Feb23 and Community Property Company (Pty) Ltd Ulundi King Senzangakona currently owned by Vukile Property Fund Limited LM026May21.
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