Fairvest Property Holdings Ltd v Portfolio of commercial properties of SA Corporate Real Estate Fund (84/LM/Aug12) [2012] ZACT 94 (7 November 2012)

Fairvest Property Holdings Ltd v Portfolio of commercial properties of SA Corporate Real Estate Fund (84/LM/Aug12) [2012] ZACT 94 (7 November 2012)

The Tribunal found that while there is no geographic overlap between the merging parties' property portfolios, exclusivity clauses in lease agreements with anchor tenants at three shopping centres could restrict small businesses' access to retail space, raising public interest concerns under section 12A(3)(c) of the Competition Act. The Tribunal approved the merger subject to conditions requiring Fairvest to negotiate in good faith with anchor tenants to remove the exclusivity clauses at lease renewal and to report to the Commission on compliance. No negative employment effects were anticipated, and no other public interest concerns were identified.

Citation
[2012] ZACT 94
Parties
Applicant: Fairvest Property Holdings Limited; Respondent: Portfolio of commercial properties of SA Corporate Real Estate Fund
Court
Competition Tribunal
Jurisdiction
South Africa
Judgment Date
7 November 2012
Case Number
84/LM/Aug12
Procedural Posture
Merger Control / Conditional Approval
Outcome
Merger conditionally approved subject to specified conditions regarding exclusivity clauses in lease agreements.
Judges
Andreas Wessels, Medi Mokuena, Takalani Madima
Legal Topics
Merger Control, Exclusivity Clauses, Public Interest, Retail Property Market
Competition Law Commercial and Corporate Merger Control Exclusivity Clauses Public Interest Retail Property Market

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Parties

Fairvest Property Holdings Limited

Applicant

Portfolio of commercial properties of SA Corporate Real Estate Fund

Respondent

Procedural Posture

Merger Control / Conditional Approval

Legal Issues

  1. 1 Whether the proposed acquisition of eleven commercial properties by Fairvest raises competition or public interest concerns under the Competition Act.
  2. 2 Whether exclusivity clauses in lease agreements with anchor tenants at three shopping centres restrict access for small businesses and require conditions for approval.

Ratio Decidendi

The Tribunal found that while there is no geographic overlap between the merging parties' property portfolios, exclusivity clauses in lease agreements with anchor tenants at three shopping centres could restrict small businesses' access to retail space, raising public interest concerns under section 12A(3)(c) of the Competition Act. The Tribunal approved the merger subject to conditions requiring Fairvest to negotiate in good faith with anchor tenants to remove the exclusivity clauses at lease renewal and to report to the Commission on compliance. No negative employment effects were anticipated, and no other public interest concerns were identified.

Court Disposition

Merger conditionally approved subject to specified conditions regarding exclusivity clauses in lease agreements.

Orders

  • Fairvest must negotiate in utmost good faith with Checkers, Pick ‘n Pay and Bridge Wholesale to remove exclusivity clauses at lease renewal for St Georges Square (2013), Middelburg Pick ‘n Pay (2013), and Mkuze Corner (2014).
  • Fairvest must provide the Competition Commission with a detailed compliance report within thirty days after entering into new lease agreements with the anchor tenants at the specified centres.