Dipula Property Fund (Pty) Ltd v Asakhe Realty Investment (42/LM/May11) [2011] ZACT 46 (7 July 2011)
- Citation
- [2011] ZACT 46
- Status
- Judgment
- Jurisdiction
- South Africa
- Court
- Competition Tribunal
- Panel
- Norman Manoim, Yasmin Carrim, Merle Holden
- Case number
- 42/LM/May11
More details
- Court
- Competition Tribunal
- Panel
- Norman Manoim, Yasmin Carrim, Merle Holden
- Case number
- 42/LM/May11
On this page
Professional case brief
Research organized from the available case record
01
Holding and result
The Tribunal found that the proposed transaction between Dipula Property Fund and Asakhe Realty Investment, including the related internal restructuring transactions, does not result in a substantial prevention or lessening of competition in any relevant market. The post-merger market shares in the affected product and geographic markets are too low to raise competition concerns. Furthermore, the transaction does not negatively impact employment or raise any other public interest concerns. Accordingly, the Tribunal approved the merger unconditionally.
Court disposition
Merger approved unconditionally.
Orders
- The proposed transaction is approved unconditionally.
02
Material facts
Parties
Dipula Property Fund (Pty) Ltd
Applicant Counsel: Vani ChettyAsakhe Realty Investment
RespondentAmounts and remedies
- Pre Merger Market Share (c Grade Office Space, Benoni Node): ZAR 7.82
- Post Merger Market Share (c Grade Office Space, Benoni Node): ZAR 10.22
- Pre Merger Market Share (retail Space, Benoni/boksburg Node): ZAR 6.91
- Post Merger Market Share (retail Space, Benoni/boksburg Node): ZAR 9.92
- Pre Merger Market Share (retail Space, Ivory Park Node): ZAR 0.91
- Post Merger Market Share (retail Space, Ivory Park Node): ZAR 3.35
- Pre Merger Market Share (retail Space, Doornfontein/johannesburg CBD Node): ZAR 4.1
- Post Merger Market Share (retail Space, Doornfontein/johannesburg CBD Node): ZAR 4.3
- Pre Merger Market Share (retail Space, Pretoria CBD Node): ZAR 12.7
- Post Merger Market Share (retail Space, Pretoria CBD Node): ZAR 18
- Pre Merger Market Share (light Industrial Space, Kelvin/wynberg/alexandra Node): ZAR 2.23
- Post Merger Market Share (light Industrial Space, Kelvin/wynberg/alexandra Node): ZAR 2.6
- Pre Merger Market Share (light Industrial Space, Robertville Node): ZAR 1.98
- Post Merger Market Share (light Industrial Space, Robertville Node): ZAR 3.21
- Pre Merger Market Share (light Industrial Space, Roodepoort Node): ZAR 0.7
- Post Merger Market Share (light Industrial Space, Roodepoort Node): ZAR 1.33
03
Procedural history
Posture
Merger Control / Approval of Proposed Merger
04
Questions and positions
Legal issues
- 01
Whether the proposed merger between Dipula Property Fund and Asakhe Realty Investment is likely to substantially prevent or lessen competition in any relevant market.
- 02
Whether the transaction raises any public interest concerns.
Party arguments
- Applicant
- Dipula Property Fund submitted that the transaction involves the acquisition of 100% of the linked units of Asakhe Realty Investment and all related claims. The applicant argued that the transaction is part of a broader internal restructuring involving Redefine and Mergence, and that there is no ultimate change in control. The parties contended that the merger would not negatively affect competition or public interest, including employment.
- Respondent
- The Competition Commission found that there is an overlap in three relevant product markets: office space, retail space, and industrial space across eight geographical areas. However, the Commission argued that the post-merger market shares remain too low to have a substantial effect on competition. The Commission also concluded that there are no public interest concerns arising from the transaction.
05
Court’s reasoning
Legal principles
- 01
Competition Act, 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, 89 of 1998
Public interest considerations must be assessed in merger proceedings, including the impact on employment and other social factors.
06
Ratio, limits and disposition
Ratio decidendi
The Tribunal found that the proposed transaction between Dipula Property Fund and Asakhe Realty Investment, including the related internal restructuring transactions, does not result in a substantial prevention or lessening of competition in any relevant market. The post-merger market shares in the affected product and geographic markets are too low to raise competition concerns. Furthermore, the transaction does not negatively impact employment or raise any other public interest concerns. Accordingly, the Tribunal approved the merger unconditionally.
Obiter and limits
- The Tribunal noted that internal restructuring transactions, where there is no ultimate change in control, generally do not impact competition.
- The Tribunal observed that the merging parties' activities are diversified across multiple property sectors and provinces, further reducing the likelihood of anti-competitive effects.
Court disposition
Merger approved unconditionally.
- The proposed transaction is approved unconditionally.
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: 42/LM/May11
In the matter between:
Dipula Property Fund (Pty) Ltd …......................................................................Acquiring Firm
And
Asakhe Realty Investment …...................................................................................Target Firm
Panel : Norman Manoim (Presiding Member)
YasminCarrim (Tribunal Member)
Merle Holden(Tribunal Member)
Heard on : 22/06/2011
Order issued on : 22/06/2011
Reasons issued on : 07/07/2011
Reasons for Decision
Approval
On 22 June2011 the Competition Tribunal (“Tribunal”) unconditionally approved the proposed transaction involving Dipula
Property Fund (Pty) Ltd and Asakhe Realty Investment. The reasons for approval of the proposed transaction follow below.
Parties to transaction
The primary acquiring firm is Dipula Property Fund (Pty) Ltd (“Dipula fund”), a private company incorporated in terms of the laws of the Republic of South Africa. Dipula Fund is controlled by Redefine Properties Ltd (“Redefine”), a private company incorporated in terms of the laws of the Republic of South Africa. Dipula Fund wholly owns Dipula Property Investment Trust (“Dipula Trust”) and Mergence Africa Property Fund (Pty) Ltd (“MAP Fund”). The acquiring firm will be referred to as “Dipula-Redefine Group.” Redefine is a property loan stock company which is listed on JSE. Its property portfolio includes rental property, office property, retail property and industrial property.
The primary target firm is Asakhe Realty Investment Fund (Pty) Ltd, a company incorporated in terms of the laws of the Republic of South Africa. Asakhe is jointly held by Standard Bank Properties (Pty) Ltd (“SBP”) and Safika Holdings (Pty) Ltd (“Safika”). Asakhe wholly owns Emerald Fire, which is a property investment company formed to hold the properties of Asakhe as an Investment.
Proposed transaction and rationale
In terms of the draft Sale Agreement entered into between SBP, Safika and Dipula Fund, Dipula Fund is acquiring from SBP and Safika 100% of the linked units of Asakhe and all claims of whatsoever nature, which SBP and Safika may have against Asakhe. Simultaneously with the Asakhe transaction, certain transactions have also been concluded, all of which are interlinked and cross-conditional upon each other.1
The Mergence-Dipula Sale includes the structure of the Mergence portfolio into that of Dipula Fund. The Mergence-Redefine sale
comprises a linked transaction in which Redefine will sell a portfolio of properties to MAP Trust. Since the Mergence-Dipula Sale and Mergence-Redefine Sale comprise an internal restructuring of the Redefine property portfolio and mergence’s and Dipula Fund’s properties fall within Redefine’s control, there is no ultimate change in control and thus no impact on competition.
Merging parties’ activities
Redefine is a property loan stock company with a diversified portfolio in the rental property market including office, retail, and industrial sectors throughought South Africa. Redefine is also active in asset management as an in-house function within the Redefine group. The Dipula-Redefine Group controls in excess of five hundred and seventy three (573) properties in 9 provinces. The property portfolio of the Dipula-Redefine Group includes the properties of Dipula Trust, Redefine, MAP Trust, Hyprop, Attfund and Vunani.
Asakhe is an investment fund active in the realty sector. Asakhe wholly owns Emerald Fire, which is a property investment company formed to hold the properties of Asakhe as an investment. Emerald’s portfolio ranges from industrial to office property.
Competitive assessment
The Commission concluded that there is an overlap with regards to three relevant product markets namely; office space, retail space and industrial space in eight geographical areas2.
The Commission concluded that the proposed transaction is unlikely to prevent or lessen competition in the relevant markets, as their post-merger market shares in the respective markets remaintoo low to have a substantial effect on competition3.
Public interest
The parties submitted that the proposed transaction will have no impact on employment nor negatively impact any other public interest
concern.
Conclusion
Based on the above we conclude that the proposed transaction is unlikely to lead to a substantial prevention or lessening of competition in any relevant market. Furthermore, no public interest concerns arise from this deal. Accordingly the proposed transaction is approved unconditionally.
____ 07/07/2011
N Manoim Date
Y Carrim and M Holden concurring
Tribunal Researcher: ThabaniNgilande
For the merging parties: VaniChetty Competition Law
For the Commission: BhekiMasilela
1These transactions are the following: In terms of a draft Sale Agreement entered into between the parties to the agreement, Dipula Fund is acquiring from Redefine and Mergence, 100% of the issued share capital of MAP Fund and all claims of whatsoever nature and from whatsoever cause arising, which Redefine and Mergence have against the MAP Fund, and In terms of a draft Sale Agreement entered into between Redefine, MAP Fund and MAP Trust, MAP Trust is acquiring from Redefine fifteen (15) property letting enterprises.
1These transactions are the following:
In terms of a draft Sale Agreement entered into between the parties to the agreement, Dipula Fund is acquiring from Redefine and Mergence, 100% of the issued share capital of MAP Fund and all claims of whatsoever nature and from whatsoever cause arising, which Redefine and Mergence have against the MAP Fund, and
In terms of a draft Sale Agreement entered into between Redefine, MAP Fund and MAP Trust, MAP Trust is acquiring from Redefine fifteen (15) property letting enterprises.
2Rentable C-Grade office space in the Benoni node (Pre-merger: 7.82% and post-merger: 10.22%); Rentable retail space (neighbourhood and local convenience stores) in the Benoni/Boksburg node (Pre-merger: 6.91% and post-merger: 9.92%); Rentable retail space (substitutable retail centres) in the Ivory Park node (Pre-merger: 0.91% and post-merger: 3.35%); Rentable retail space (neighbourhood and local convenience centres) in the Doornfontein. Johannesburg CBD node (Pre-merger: 4.1% and post-merger: 4.3%); Rentable retail space (community, neighbourhood and local convenience centres) in the Pretoria CBD node (Pre-merger: 12.7% and post-merger: 18%); Light industrial space in the Kelvin/ Wynberg/ Alexandra node (Pre-merger: 2.23% and post-merger: 2.6%); Light industrial space in the Robertville node (Pre-merger: 1.98% and post-merger: 3.21%); Light industrial space in the Roodepoort node (Pre-merger: 0.7% and post-merger: 1.33%)
3Ibid.
3
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