Fountainhead Property Trust v FHP Managers (Pty) Ltd (61/LM/Sep10) [2010] ZACT 75 (3 November 2010)
- Citation
- [2010] ZACT 75
- Status
- Order
- Jurisdiction
- South Africa
- Court
- Competition Tribunal
- Panel
- Norman Manoim, Yasmin Carrim, Andreas Wessels
- Case number
- 61/LM/Sep10
More details
- Court
- Competition Tribunal
- Panel
- Norman Manoim, Yasmin Carrim, Andreas Wessels
- Case number
- 61/LM/Sep10
On this page
Professional case brief
Research organized from the available case record
01
Holding and result
The Tribunal found that although both parties are involved in the property market, Fountainhead does not currently own any A-grade office property in the Constantia Kloof Basin where the target property is situated. Therefore, there is no horizontal overlap between the activities of the merging parties in respect of rentable A-grade office space in the relevant geographical node. The transaction is unlikely to substantially lessen or prevent competition. Furthermore, no public interest issues arise from the proposed transaction. Accordingly, the Tribunal approved the transaction unconditionally.
Court disposition
The proposed transaction is approved unconditionally.
Orders
- The merger between Fountainhead Property Trust and FHP Managers (Pty) Ltd in respect of the Constantia Valley Sale Property is approved without conditions.
02
Material facts
Parties
Fountainhead Property Trust
Applicant Counsel: Vani ChettyFHP Managers (Pty) Ltd
RespondentAmounts and remedies
- Undivided Share in Section 4 of Constantia Valley: 0.8
03
Procedural history
Posture
Merger Application / Approval
04
Questions and positions
Legal issues
- 01
Whether the proposed acquisition of the Constantia Valley Sale Property by Fountainhead Property Trust from FHP Managers (Pty) Ltd is likely to substantially lessen or prevent competition in the relevant market.
- 02
Whether any public interest issues arise from the proposed transaction.
Party arguments
- Applicant
- Fountainhead Property Trust argued that the acquisition aligns with its strategy to acquire A-grade properties with strong and certain cash flow in established nodes. It does not currently own any A-grade office property in the Constantia Kloof Basin, and the transaction would not result in a horizontal overlap in the relevant market.
- Respondent
- FHP Managers (Pty) Ltd submitted that, as a trader and developer of property, its rationale for the sale is to realise a profit from the Constantia Valley Sale Property, which was developed into A-grade office space in 2009. The transaction is a standard commercial sale with no anti-competitive intent.
05
Court’s reasoning
Legal principles
- 01
Competition Act, No. 89 of 1998
A merger will only be prohibited if it is likely to substantially lessen or prevent competition in the relevant market.
- 02
Tribunal precedent
The absence of horizontal overlap in the relevant geographic market indicates no substantial lessening of competition.
06
Ratio, limits and disposition
Ratio decidendi
The Tribunal found that although both parties are involved in the property market, Fountainhead does not currently own any A-grade office property in the Constantia Kloof Basin where the target property is situated. Therefore, there is no horizontal overlap between the activities of the merging parties in respect of rentable A-grade office space in the relevant geographical node. The transaction is unlikely to substantially lessen or prevent competition. Furthermore, no public interest issues arise from the proposed transaction. Accordingly, the Tribunal approved the transaction unconditionally.
Obiter and limits
- The Tribunal noted that the acquisition is consistent with Fountainhead's strategy to expand its portfolio of A-grade properties in established nodes.
- No concerns were raised by third parties or the public regarding the transaction.
Court disposition
The proposed transaction is approved unconditionally.
- The merger between Fountainhead Property Trust and FHP Managers (Pty) Ltd in respect of the Constantia Valley Sale Property 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
Order
COMPETITION TRIBUNAL OF SOUTH
AFRICA
Case No: 61/LM/Sep10
In the matter between:
Fountainhead Property Trust …....................................................................Acquiring Firm
And
FHP Managers (Pty) Ltd in respect of the
Constantia Valley Sale Property …....................................................................Target Firm
Panel : Norman Manoim (Presiding Member) Yasmin Carrim (Tribunal Member) Andreas Wessels (Tribunal Member)
Heard on : 06 October 2010
Order issued on : 06 October 2010
Reasons issued on : 03 November 2010
Reasons for Decision
APPROVAL
On 06 October 2010, the Competition Tribunal (“Tribunal”) unconditionally approved the transaction involving Fountainhead Property Trust and FHP Managers (Pty) Ltd in respect of the Constantia Valley Sale Property (see paragraph below). The reasons for the approval follow below.
PARTIES
TO THE PROPOSED TRANSACTION AND THEIR ACTIVITIES
The primary acquiring firm is Fountainhead Property Trust (“Fountainhead”)1, a property unit trust managed by Fountainhead Property Trust Management Ltd (“FPTML”). Fountainhead is a closed-end
fund and listed on the JSE. FPTML is the asset manager of Fountainhead and is jointly owned by Standard Bank Properties (Pty)
Ltd and Liberty Group Ltd.
Fountainhead is a diversified real estate investment fund, invested in retail, industrial and office property mainly in the metropolitan areas of South Africa.
The primary target firm is FHP Managers (Pty) Ltd (“FHP Managers”) in respect of the Constantia Valley Sale Property. FHP Managers is a wholly owned subsidiary of Standard Bank Group Ltd. The Constantia Valley Sale Property comprises FHP Managers’s undivided 4/5 (four fifths) share in section 4 of the proposed sectional title scheme known as Constantia Valley, situated in Constantia Kloof, Roodepoort, Gauteng. Section 4 of Constantia Valley forms part of an office park known as Constantia Valley Office Park and is categorised as A-grade office space. This development was completed in 2009.
FHP Managers is a developer and trader in property assets. It owns certain office, retail and industrial properties in South Africa and performs its own asset management services. The relevant part of the property portfolio of FHP Managers for purposes of this transaction is however only the above-mentioned Constantia Valley Sale Property.
DESCRIPTION
OF THE TRANSACTION
In terms of the sale agreement between the parties, Fountainhead is acquiring the Constantia Valley Sale Property from FHP Managers.
RATIONALE
FOR THE TRANSACTION
Fountainhead submitted that this acquisition is in line with its strategy of acquiring A-grade properties, with strong and certain cash flow, in established nodes. FHP Managers submitted that as a trader and developer of property, it is looking to make a profit from the sale of the Constantia Valley Sale Property which was developed into A-grade office space in 2009.
COMPETITION
ANALYSIS
Although both the merging parties are involved in the property market, Fountainhead does not currently own any A-grade office property in the Constantia Kloof Basin where the target property is situated. There is therefore no horizontal overlap between the activities of the merging parties in respect of rentable A-grade office space in the relevant geographical node, i.e. the Constantia Kloof Basin.
CONCLUSION
The proposed transaction is unlikely to substantially lessen or prevent competition since there is no geographic overlap between the property rental activities of the merging parties. In addition, no public interest issues arise from the proposed transaction. Accordingly we approve the proposed transaction unconditionally.
Date: 03 November 2010
Andreas Wessels
Norman Manoim and Yasmin Carrim concurring
Tribunal Researcher: Ipeleng Selaledi
For the merging parties: Vani Chetty Competition Law
For the Commission: Nazeera Ramroop
1Originally known as the Standard Bank Property Fund and subsequently Allan Gray Property Trust, Fountainhead was renamed “Fountainhead
Property Trust” on 01 June 2007.
1
Case-aware research
Ask AI about this case
The judgment and available research above are public. New questions open in a separate private conversation grounded in this case.