Community Property Company (Pty) Ltd v Ulundi King Senzangakona currently owned by Vukile Property Fund Limited (LM026May21) [2021] ZACT 30 (23 June 2021)

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COMPETITION

TRIBUNAL OF SOUTH AFRICA

Case No.: LM026May21

In the matter between:

Community Property Company (Pty) Ltd Primary Acquiring Firm

And

Ulundi King Senzangakona currently owned by Primary Target Firm

Vukile Property Fund Limited

Panel: M Mazwai (Presiding Member)

F Tregenna (Tribunal Panel Member)

T Vilakazi (Tribunal Panel Member)

Heard on: 23 June 2021

Order Issued on: 23 June 2021

ORDER

Further to the recommendation of the Competition Commission in terms of section 14A(1)(b) of the Competition Act, 1998 (“the Act”) the Competition Tribunal orders that–

1. the merger between the abovementioned parties be approved in terms of section 16(2)(a) of the Act; and

2. a Merger Clearance Certificate be issued in terms of Competition Tribunal Rule 35(5)(a).

Presiding Member 23 June 2021

Ms M Mazwai Date

Concurring: Prof. Fiona Tregenna and Dr Thando Vilakazi

Case no: LM026May21

In the large merger between:

Community Property Company (Pty) Ltd (Primary Acquiring Firm)

Ulundi King Senzangakona currently owned by

Vukile Property Fund Limited (Primary Target Firm)

Heard on: 23 June 2021

Order Issued on: 23 June 2021

REASONS FOR DECISION

[1] On 23 June 2021, the Competition Tribunal unconditionally approved the large merger between Community Property Company (Pty) Ltd (“CPC”) and the letting enterprise known as Ulundi King Senzangakona Shopping Centre, owned by Vukile Property Fund Limited (the “target property”). The target property is located at King Dinuzulu/Princess Magogo Street in Ulundi, northern Kwa-Zulu Natal.

[2] The transaction involves CPC acquiring the target property from Vukile Property Fund Limited, such that CPC will have sole control over the target property post-merger.

[3] CPC is ultimately controlled by Old Mutual Limited ("OML").[1] The acquiring group through CPC is a property fund with a portfolio made up entirely of retail property, primarily community, small regional and regional shopping centres in rural and township areas in all nine provinces.

[4] The target property is a community centre with a gross lettable area (“GLA”) of 22 365m2. It consists of various components such as the main linear mall with line shops, a formal taxi rank, a KFC drive through and a fast-food court.[2]

[5] The Competition Commission (“Commission”) found a horizontal overlap in the activities of the merging parties as they are both active in the provision of lettable retail property. However, the Commission found no geographic overlap as the acquiring group does not own lettable centres within a 15km radius of the target property.[3]

[6] The Commission concluded that the proposed transaction is unlikely to substantially prevent or lessen competition as there is no geographic overlap between the activities of the merging parties. The Commission also found that the proposed transaction is unlikely to change the structure of the market for comparative rentable shopping centres in Ulundi.

[7] The Commission found that concerns raised by third parties relating to lease negotiations and the management of the target property, were either unaffected by the proposed transaction, or had no bearing on competition or the public interest.

[8] In relation to public interest considerations, the Commission contacted the target property’s employee representative who confirmed that the employees were informed of the proposed transaction and raised no concerns. The Commission found that CPC does not have any employees.

[9] We also note that the merging parties provided an unequivocal statement that the proposed transaction would have no effect on employment, particularly no retrenchments or job losses.

[10] We concluded that the proposed transaction is unlikely to substantially prevent or lessen competition in any relevant market, or to have a negative impact on the public interest.

Ms Mondo Mazwai 23 June 2021

Prof. Fiona Tregenna and Dr Thando Vilakazi concurring Date

Tribunal Case Manager: Peter Kumbirai

For the Merging Parties: Albert Aukema of Cliffe Dekker Hofmeyr Inc

For the Commission: Yolanda Okharedia and Themba Mahlangu

[1] OML controls several firms in South Africa, and is not controlled by any individual shareholder.

[2] The target property also houses anchor stores such as Spar, Game and Cashbuild, as well as other tenants that are well-known stores.

[3] The nearest lettable retail property owned by the acquiring group is incomparable as it is 70kms away from the target property, and is a convenience centre with a maximum GLA of 5 000m2. .

[3] The nearest lettable retail property owned by the acquiring group is incomparable as it is 70kms away from the target property, and is a convenience centre with a maximum GLA of 5 000m2.

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