Equites Property Fund Limited v Attacq Waterfall Investment Company (Pty) Ltd (LM063Aug21) [2021] ZACT 68 (5 October 2021)
- Citation
- [2021] ZACT 68
- Status
- Judgment
- Jurisdiction
- South Africa
- Court
- Competition Tribunal
- Panel
- Enver Daniels, Imraan Valodia, Halton Cheadle
- Case number
- LM063Aug21
More details
- Court
- Competition Tribunal
- Panel
- Enver Daniels, Imraan Valodia, Halton Cheadle
- Case number
- LM063Aug21
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 Equites Property Fund Limited and Attacq Waterfall Investment Company (Pty) Ltd, involving undivided half share interests in the Amrod, Massmart, and Cotton-On properties, would not substantially prevent or lessen competition in the market for rentable light industrial properties within a 15km radius of the Target Enterprises in Midrand. The combined post-merger market share would be less than 10%, with an accretion of less than 1%, and there are sufficient alternative properties available in the area. No public interest concerns were identified. Accordingly, the Tribunal unconditionally approved the merger.
Court disposition
Merger unconditionally approved.
Orders
- The large merger between Equites Property Fund Limited and Attacq Waterfall Investment Company (Pty) Ltd is unconditionally approved.
- No conditions are imposed on the approval of the merger.
02
Material facts
Parties
Equites Property Fund Limited
Applicant Counsel: Vani ChettyAttacq Waterfall Investment Company (Pty) Ltd
RespondentAmounts and remedies
- Combined Post Merger Market Share (gla, Midrand Node): ZAR 10
- Market Share Accretion (gla, Midrand Node): ZAR 1
03
Procedural history
Posture
Merger Approval / Final Decision
04
Questions and positions
Legal issues
- 01
Whether the proposed merger will substantially prevent or lessen competition in the market for rentable light industrial properties within a 15km radius of the Target Enterprises in Midrand.
- 02
Whether the merger raises any public interest concerns.
Party arguments
- Applicant
- The applicant argued that the acquisition of undivided half share interests in the properties known as Amrod, Massmart, and Cotton-On would not result in a substantial prevention or lessening of competition. The applicant submitted that the combined market share post-merger would be less than 10%, with an accretion of less than 1%, and that there are sufficient alternative rentable light industrial properties within the relevant geographic area. No public interest concerns were raised.
- Respondent
- The respondent, Attacq Waterfall Investment Company (Pty) Ltd, did not oppose the merger and did not raise any arguments against the transaction. The Competition Commission, acting as respondent, found that the transaction would not significantly alter the market structure, that alternative properties exist within the relevant area, 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 Commission Guidelines
The assessment of market share and accretion is relevant to determining the competitive impact of a merger.
- 03
Competition Act, 89 of 1998
Public interest considerations must be evaluated in merger proceedings.
06
Ratio, limits and disposition
Ratio decidendi
The Tribunal found that the proposed merger between Equites Property Fund Limited and Attacq Waterfall Investment Company (Pty) Ltd, involving undivided half share interests in the Amrod, Massmart, and Cotton-On properties, would not substantially prevent or lessen competition in the market for rentable light industrial properties within a 15km radius of the Target Enterprises in Midrand. The combined post-merger market share would be less than 10%, with an accretion of less than 1%, and there are sufficient alternative properties available in the area. No public interest concerns were identified. Accordingly, the Tribunal unconditionally approved the merger.
Obiter and limits
- The Tribunal noted that both merging parties would exercise joint control over the Target Enterprises post-merger.
- The Cotton-On property is currently undeveloped but will be let to Cotton-On South Africa (Pty) Ltd once completed.
- The Commission's market definition and analysis were accepted without modification.
Court disposition
Merger unconditionally approved.
- The large merger between Equites Property Fund Limited and Attacq Waterfall Investment Company (Pty) Ltd is unconditionally 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: LM063Aug21
Equites Property Fund Limited (Primary Acquiring Firm)
And
Attacq Waterfall Investment Company (Pty) Ltd in respect of undivided half share interests in the properties known as Amrod, Massmart and Cotton-On (Primary Target Firm)
Heard on:
29 September 2021
Order Issued on: 29 September 2021
Reasons Issued on: 05 October 2021
REASONS
FOR DECISION
[1] On 29 September 2021, the Competition Tribunal (“Tribunal”)
unconditionally approved a large merger whereby Equites Property Fund Limited (“Equites”) intends to acquire undivided half share interests in the properties known as Amrod, Massmart and Cotton-On (“Target Enterprises”) from Attacq Waterfall
Investment Company (Pty) Ltd (“Attacq Waterfall Investment”). Post-merger, Equites will hold undivided half share interests in the properties known as Amrod, Massmart and Cotton-on. Equites and Attacq Waterfall Investment will both exercise joint control over the Target Enterprises.
[2] Equites is not controlled by any single firm but directly and indirectly controls several firms.[1] The Acquiring Group is a listed Real Estate Investment Trust (“REIT”) with a focus on owning and developing modern logistics properties let to A-grade tenants. The Acquiring Group owns numerous rentable light industrial properties in South Africa.
[3] The Primary Target Firm is Attacq Waterfall Investment in respect of undivided half share interests in the Target Enterprises. The Target Enterprises do not control any firms and can be described as follows:
3.1. the Amrod Rental Enterprise which is a logistics property that is located at Old Pretoria Road (K101) and Beatty Road, Waterfall District, Midrand and comprises 38,455 square metres of rentable industrial, warehousing and distribution space. The only tenant occupying the above space is Acorp Gifts (Pty) Ltd;
3.2. The Massmart Rental Enterprise which is a light industrial property that is located at the corner of Bridal Veil Road and Lisbon Lane, Waterfall City, Midrand and comprises 36,803 square metres of rentable industrial, warehousing and distribution space. The only tenant occupying the above space is Builders, a division of Massmart Retail (Pty) Ltd.
3.3. The Cotton-On Property which constitutes undeveloped land that is located at the corner of Bridal Veil Road and Howick Avenue, Waterfall City, Midrand and comprises 35,310 square metres of rentable industrial, warehousing and distribution space. Once developed, the property will be light industrial property space. The only tenant who will ultimately occupy the above space once the building is completed is Cotton-On South Africa (Pty) Ltd.
[4] The Competition Commission (“Commission”) considered the activities of the merging parties and found that the proposed transaction results in a horizontal overlap in the provision of rentable light industrial properties. This is because the Target Enterprises are rentable light industrial properties, and the
Acquiring Group has numerous rentable light industrial properties. The Target Enterprises as well as the Acquiring Group’s
numerous rentable light industrial properties are situated in the Gauteng Province.
[5] The Commission assessed a market for the provision of rentable light
industrial properties within a 15km radius from the Target Enterprises (Midrand) and found that the merged entity will have a combined post-merger market share of less than 10% with an accretion of less than 1% in the relevant market based on the total Gross
Lettable Area (GLA) in the Midrand node in Gauteng.
[6] Based on the above, the Commission found that the proposed transaction is unlikely to significantly alter the structure of the relevant market. Further, there are alternative rentable light industrial properties within 15km of the Target Enterprises in Midrand and surrounding areas. As such, the Commission was of the view that the proposed transaction is unlikely to lead to a substantial prevention or lessening of competition in any relevant market.
[7] The proposed transaction does not raise any public interest concerns.
[8] We conclude that the proposed transaction is unlikely to substantially prevent or lessen competition in any relevant market. Furthermore, it raises no public interest concerns.
05 October 2021
Mr Enver Daniels
Date
Prof Imraan Valodia and Mr Halton Cheadle concurring
Tribunal Case Manager: Camilla Mathonsi
For the Merging Parties: Vani Chetty of Vani Chetty Competition Law (Pty) Ltd
For the Commission: Zintle Siyo and Themba Mahlangu
[1] Equites and all its subsidiaries will collectively be referred to as the “Acquiring Group.”
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