Emerging African Property Partners (Pty) Ltd v Lisaline Investment Holdings (Pty) Ltd (LM124Oct19) [2020] ZACT 4; [2020] 1 CPLR 348 (CT) (10 January 2020)
- Citation
- [2020] ZACT 4
- Status
- Judgment
- Jurisdiction
- South Africa
- Court
- Competition Tribunal
- Panel
- E Daniels, Y Carrim, A Ndoni
- Case number
- LM124Oct19
More details
- Court
- Competition Tribunal
- Panel
- E Daniels, Y Carrim, A Ndoni
- Case number
- LM124Oct19
On this page
Professional case brief
Research organized from the available case record
01
Holding and result
The Tribunal found that although both merging parties are active in the provision of rentable light industrial property, there is no significant geographic overlap between their properties. The target property is situated in Boksburg, while the acquiring group's relevant properties are approximately 53km away. The Tribunal agreed with the Commission's assessment that the transaction is unlikely to result in a substantial prevention or lessening of competition. Furthermore, the Tribunal noted a pro-public interest benefit, as the transaction involves a partnership with a black-owned women-empowerment property company and the Government Employee Pension Fund. No public interest concerns were identified. Accordingly, the Tribunal approved the proposed transaction unconditionally.
Court disposition
The proposed transaction is approved unconditionally.
Orders
- The merger between Emerging African Property Partners (Pty) Ltd and Lisaline Investment Holdings (Pty) Ltd is approved without conditions.
02
Material facts
Parties
Emerging African Property Partners (Pty) Ltd
Applicant Counsel: A Aukema and D MogapiLisaline Investment Holdings (Pty) Ltd
RespondentAmounts and remedies
- Gross Lettable Area of Target Property (gla): ZAR 38,674
03
Procedural history
Posture
Merger Approval / Final Determination
04
Questions and positions
Legal issues
- 01
Whether the proposed merger will substantially prevent or lessen competition in any relevant market.
- 02
Whether any public interest concerns arise from the proposed transaction.
Party arguments
- Applicant
- The applicant argued that the transaction involves the acquisition of control over a single industrial property and does not result in any significant overlap with the acquiring group's existing properties. The applicant further submitted that the transaction would have a pro-public interest benefit by involving a black-owned women-empowerment property company as a partner with the Government Employee Pension Fund.
- Respondent
- The respondent, through the Commission, argued that while there is a product overlap in the provision of rentable light industrial property, there is no geographic overlap as the properties are located approximately 53km apart. The Commission concluded that the transaction is unlikely to result in a substantial prevention or lessening of competition and that no public interest concerns arise.
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 promotion of historically disadvantaged persons.
06
Ratio, limits and disposition
Ratio decidendi
The Tribunal found that although both merging parties are active in the provision of rentable light industrial property, there is no significant geographic overlap between their properties. The target property is situated in Boksburg, while the acquiring group's relevant properties are approximately 53km away. The Tribunal agreed with the Commission's assessment that the transaction is unlikely to result in a substantial prevention or lessening of competition. Furthermore, the Tribunal noted a pro-public interest benefit, as the transaction involves a partnership with a black-owned women-empowerment property company and the Government Employee Pension Fund. No public interest concerns were identified. Accordingly, the Tribunal approved the proposed transaction unconditionally.
Obiter and limits
- The Tribunal noted the importance of promoting historically disadvantaged persons in property transactions, as reflected in the partnership structure of the acquiring firm.
- The Tribunal concurred with the Commission's finding that geographic separation between properties can mitigate competition concerns in merger assessments.
Court disposition
The proposed transaction is approved unconditionally.
- The merger between Emerging African Property Partners (Pty) Ltd and Lisaline Investment Holdings (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
SOUTH
AFRICA
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case No: LM124Oct19
In the matter between
Emerging African Property Partners (Pty) Ltd
Primary Acquiring Firm
And
Lisaline Investment Holdings (Pty) Ltd
Primary Target Firm
Panel: Mr E Daniels (Presiding Member)
: Ms Y Carrim (Tribunal Member)
: Ms A Ndoni (Tribunal Member)
Heard on: 11 December 2019
Order Issued on: 11 December 2019
Reasons Issued on: 10 January 2020
REASONS
FOR DECISION
Approval
[1] On 11 December 2019, the Tribunal unconditionally approved the proposed transaction in terms of which Emerging African Property Partners (Pty) Ltd (EAPP) is acquiring control over Lisaline Investment Holdings (Pty) Ltd (Lisaline Holdings).
[2] The reasons for the approval of the proposed transaction follow.
Parties to the transaction
[3] The primary acquiring firm, EAPP is a new company that was established with the mandate of investing in sale and leaseback transactions where the focus is on industrial properties. EAPP is jointly controlled by the Government Employee Pension Fund (GEPF), an Emerging African Property Holdings (Pty) Ltd (EAPH). Apart from EAPP, GEPF· holds interests in several property firms. EAHP also controls several property firms.
[4] GEPF, EAHP, and all the firms they directly and indirectly control will be collectively referred to as the "Acquiring group". Of relevance for merger assessment is the Acquiring group's industrial property interests, through the GEPF, in Gauteng and KwaZulu-Natal.
[5] The primary target firm, Lisaline Holdings is wholly owned by Enigma Property (Pty) Ltd (Enigma Property). Pre-merger, Usaline Holdings and Enigma Property jointly control Lisaline (Pty) Ltd (Lisaline). As a preliminary step of the proposed transaction, Lisaline Holdings will acquire sole control of Lisaline from Enigma Property.
[6] Lisaline's sole activity is owning a large light industrial property known as Portion 772 of the farm Klipfontein (target property) which is situated in Boksburg. The target property has a GLA of 38 674m2 and comprises of a large warehouse with an auxiliary office block, workshop, dining and ablution building.
Proposed transaction and rationale
[7] EAPP intends to acquire 90% of the issued shares in and loan claim against Lisaline. Holdings from Enigma Property. Post-merger,
EAPP will acquire sole control of Lisaline Holdings.
Impact on competition
[8] The Commission considered the activities of the merging parties and found a product overlap because both the merging parties are active in the provision of rentable light industrial property. The Commission however, concluded that the proposed transaction does
not present a geographic overlap because the Acquiring group's industrial property is .located approximately 53km away from the
target property; In view of the above, the Commission concluded that the proposed transaction is unlikely to result in a substantial
prevention or lessening of competition. We find no reason to disagree with the Commission.
Public interest
[9] There is a pro-public interest benefit resulting from the proposed transaction. This is because a black owned women-empowerment property company will be partnering with the GEPF.[1] Lastly, no public interest concerns arise as a result of the proposed transaction,
Conclusion
[10] In light of the above, we concluded that the proposed transaction is unlikely to substantially prevent or lessen competition in any relevant market. In addition, no public interest issues arise from the proposed transaction. Accordingly, we approyed the proposed transaction unconditionally.
10 January 2020
Date
______
Mr Enver Daniels
Ms Y Carrim and A Ndoni concurring.
Tribunal Case Manager: Kgothatso Kgobe
For the Merging Parties: A Aukema and D Mogapi of Cliffe Dekker Hofmyer
For the Commission : Y Okharedia and W Gumbie
[1] Pages 4 and 5 of the Hearing Transcript.
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