Flameup Investments (Pty) Ltd v Festigen Investments (LM163Mar20) [2020] ZACT 12 (8 April 2020)
- Citation
- [2020] ZACT 12
- Status
- Order
- Jurisdiction
- South Africa
- Court
- Competition Tribunal
- Panel
- Enver Daniels, Halton Cheadle, Fiona Tregenna
- Case number
- LM163Mar20
More details
- Court
- Competition Tribunal
- Panel
- Enver Daniels, Halton Cheadle, Fiona Tregenna
- Case number
- LM163Mar20
On this page
Professional case brief
Research organized from the available case record
01
Holding and result
The Tribunal found that post-merger, the combined entity would hold an 18% market share with a 12% accretion, but would not gain market power due to the presence of several competitors. The transaction was unlikely to substantially lessen or prevent competition. No job losses or adverse public interest effects were identified, and employee representatives raised no objections. The Tribunal concurred with the Commission's findings and approved the merger unconditionally.
Court disposition
Merger unconditionally approved.
Orders
- The proposed merger between Flameup Investments (Pty) Ltd and Festigen Investments (Pty) Ltd in respect of River Crescent Centre is unconditionally approved.
02
Material facts
Parties
Flameup Investments (Pty) Ltd
Applicant Counsel: V ChettyFestigen Investments (Pty) Ltd
RespondentAmounts and remedies
- Post Merger Market Share: 18
- Market Share Accretion: 12
- Gross Lettable Area of Witbank Medical Centre (m2): 13,920
- Gross Lettable Area of River Crescent Centre (m2): 24,721
03
Procedural history
Posture
Merger Approval / Final Determination
04
Questions and positions
Legal issues
- 01
Whether the proposed merger would substantially lessen or prevent competition in the relevant market.
- 02
Whether the transaction would have adverse public interest effects, including job losses.
Party arguments
- Applicant
- Flameup Investments argued that the acquisition of River Crescent Centre aligns with its investment mandate in the property market. The transaction would not result in job losses, as family-related employees would be accommodated by sister entities controlled by Mr Strydom.
- Respondent
- Festigen Investments submitted that the transaction provides an opportunity to reduce its financial exposure. Both parties asserted that no retrenchments would occur and employee representatives raised no concerns.
05
Court’s reasoning
Legal principles
- 01
Competition Act, No. 89 of 1998
A merger may only be prohibited if it is likely to substantially prevent or lessen competition in the relevant market.
- 02
Competition Act, No. 89 of 1998
Public interest considerations, including employment effects, must be assessed in merger proceedings.
06
Ratio, limits and disposition
Ratio decidendi
The Tribunal found that post-merger, the combined entity would hold an 18% market share with a 12% accretion, but would not gain market power due to the presence of several competitors. The transaction was unlikely to substantially lessen or prevent competition. No job losses or adverse public interest effects were identified, and employee representatives raised no objections. The Tribunal concurred with the Commission's findings and approved the merger unconditionally.
Obiter and limits
- The Tribunal noted that the merging parties' submissions on employment were accepted, and no further public interest concerns were raised.
- The Commission's market definition and assessment methodology were endorsed by the Tribunal.
Court disposition
Merger unconditionally approved.
- The proposed merger between Flameup Investments (Pty) Ltd and Festigen Investments (Pty) Ltd in respect of River Crescent Centre is unconditionally approved.
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
Order
Competition tribunal
SOUTH
AFRICA
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case No: LM163Mar20
In the matter between:
Flameup Investments (Pty) LtdPrimary Acquiring Firm
Flameup Investments (Pty) Ltd
Primary Acquiring Firm
Festigen Investments (Pty) Ltd in respect of thePrimary Target Firm
Festigen Investments (Pty) Ltd in respect of the
Primary Target Firm
letting enterprise known as River Crescent Centre
Panel: Mr Enver Daniels (Presiding Member)
Prof. Halton Cheadle (Tribunal Member)
Prof. Fiona Tregenna (Tribunal Member)
Heard on: 08 April 2020
Order Issued on: 08 April 2020
Reasons Issued on: 08 April 2020
REASONS
FOR DECISION
Approval
[1]On 08 April 2020, the Competition Tribunal unconditionally approved the proposed merger transaction whereby Flameup Investments (Pty) Ltd intends to acquire the letting enterprise known as River Crescent Centre, as a going concern, from Festigen Investments (Pty) Ltd.
On 08 April 2020, the Competition Tribunal unconditionally approved the proposed merger transaction whereby Flameup Investments (Pty) Ltd intends to acquire the letting enterprise known as River Crescent Centre, as a going concern, from Festigen Investments (Pty) Ltd.
[2]The reasons for our approval follow.
The reasons for our approval follow.
Parties to the transaction
[3]Flameup Investments (Pty) Ltd ("Flameup Investments") is a private company controlled by Oneeighty Holdings (Pty) Ltd ("Oneeighty").
Flameup Investments (Pty) Ltd ("Flameup Investments") is a private company controlled by Oneeighty Holdings (Pty) Ltd ("Oneeighty").
[4][…]
[5]Flameup Investments is a property holding company and does not control any firms. Flameup Investments and the firms directly and indirectly controlling it will be collectively referred to as the "ONE Group".
Flameup Investments is a property holding company and does not control any firms. Flameup Investments and the firms directly and indirectly controlling it will be collectively referred to as the "ONE Group".
[6]ONE Group is a property holding, investment and management group with a portfolio comprising retail, residential and office properties across South Africa. Of relevance to the proposed transaction is the Witbank Medical Centre which falls within the ONE Group property portfolio. The Witbank Medical Centre is situated in Witbank, Mpumalanga and has a total gross lettable area (GLA) of 13 920m2.
ONE Group is a property holding, investment and management group with a portfolio comprising retail, residential and office properties across South Africa. Of relevance to the proposed transaction is the Witbank Medical Centre which falls within the ONE Group property portfolio. The Witbank Medical Centre is situated in Witbank, Mpumalanga and has a total gross lettable area (GLA) of 13 920m2.
[7]River Crescent Centre is controlled by Festigen Investments (Pty) Ltd ("Festigen Investments"). Festigen Investments is a private company and is controlled by Gerhard Strydom.
River Crescent Centre is controlled by Festigen Investments (Pty) Ltd ("Festigen Investments"). Festigen Investments is a private company and is controlled by Gerhard Strydom.
[8]Festigen Investments is a property development and letting company situated in Mpumalanga. Festigen Investments does not directly or indirectly control any other firms.
Festigen Investments is a property development and letting company situated in Mpumalanga. Festigen Investments does not directly or indirectly control any other firms.
[9]River Crescent Centre is a retail community shopping centre with a total GLA of 24 721m2.
River Crescent Centre is a retail community shopping centre with a total GLA of 24 721m
Proposed transaction
[10]In terms of the proposed transaction, Flameup Investments will acquire the letting enterprise, River Crescent Centre, as a going concern. Upon implementation of the proposed transaction, Flameup Investments will exercise sole control of River Crescent Centre.
In terms of the proposed transaction, Flameup Investments will acquire the letting enterprise, River Crescent Centre, as a going concern. Upon implementation of the proposed transaction, Flameup Investments will exercise sole control of River Crescent Centre.
[11]ONE Group submitted that the target firm aligned with its investment mandate to invest in the property market. Festigen Investments submitted that the proposed transaction represented an opportunity for it to reduce its financial exposure.
ONE Group submitted that the target firm aligned with its investment mandate to invest in the property market. Festigen Investments submitted that the proposed transaction represented an opportunity for it to reduce its financial exposure.
Competition Assessment
[12]The Commission investigated the proposed transaction in the market for the provision of rentable convenience centres within a radius of 10km of River Crescent Centre, Witbank, Mpumalanga.
The Commission investigated the proposed transaction in the market for the provision of rentable convenience centres within a radius of 10km of River Crescent Centre, Witbank, Mpumalanga.
[13]For purposes of its assessment the Commission included properties currently held by ONE Group such as the Witbank Medical Centre, as well as competitors which fall into the same market as the River Crescent Centre.
For purposes of its assessment the Commission included properties currently held by ONE Group such as the Witbank Medical Centre, as well as competitors which fall into the same market as the River Crescent Centre.
[14]The Commission found that post transaction the merged entity would have a market share of approximately 18% with a market share accretion of approximately 12%. However, the merged entity would not gain any market power as they would be constrained by several other players in the market. The Commission was therefore of the view that the proposed transaction was unlikely to lessen or prevent competition in the market.
The Commission found that post transaction the merged entity would have a market share of approximately 18% with a market share accretion of approximately 12%. However, the merged entity would not gain any market power as they would be constrained by several other players in the market. The Commission was therefore of the view that the proposed transaction was unlikely to lessen or prevent competition in the market.
[15]We concur with the Commission's findings and are of the view that the proposed transaction is unlikely to result in a SLC in the market.
We concur with the Commission's findings and are of the view that the proposed transaction is unlikely to result in a SLC in the market.
Public interest
[16] The merging parties submitted that no job losses or retrenchments will occur as a result of the proposed transaction. They submitted that three family related employees currently employed by River Crescent Centre would be accommodated by sister entities in which Mr Strydom is a 100% shareholder.
[17]The Commission contacted employee representatives of both Flameup Investments and Festigen Investments who raised no concerns regarding the proposed transaction.
The Commission contacted employee representatives of both Flameup Investments and Festigen Investments who raised no concerns regarding the proposed transaction.
[18]The Commission therefore accepted the merging parties' submissions on employment. No further public interest concerns were raised.
The Commission therefore accepted the merging parties' submissions on employment. No further public interest concerns were raised.
Conclusion
[19]In view of the above, we concluded that the proposed transaction is unlikely to result in a SLC in any market. In addition, the proposed transaction will not result in job losses or have adverse effects on any other public interest considerations.
In view of the above, we concluded that the proposed transaction is unlikely to result in a SLC in any market. In addition, the proposed transaction will not result in job losses or have adverse effects on any other public interest considerations.
[20]We therefore approved the proposed transaction unconditionally.
We therefore approved the proposed transaction unconditionally.
8 April 2020
____
Mr Enver Daniels
Prof. Halton Cheadle and Prof. Fiona Tregenna concurring.
Tribunal Economist: Karissa Moothoo Padayachie
For the Merging Partie V Chetty of Vani Chetty Competition Law (Pty) Ltd
For the Commission: N Msiza and M Aphane
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