Government Employee Pension Fund (represented by the Public Investment Corporation) v The Leasehold Rights (LM020May21) [2021] ZACT 32 (23 June 2021)
The Tribunal found that the Government Employee Pension Fund Group does not own or have interests in firms that own Grade P office space, and the Deloitte Lease establishes Deloitte as the sole tenant in the building. There are no horizontal or vertical overlaps between the merging parties, and the transaction does...
Source-derived case information.
- Citation
- [2021] ZACT 32
- Parties
- Applicant: Government Employee Pension Fund (represented by the Public Investment Corporation SOC Ltd); Respondent: The Leasehold Rights (and obligations) in respect of the immovable property situated at Erf 4525 Jukskei View Extension 89 Township and letting enterprise conducted in respect of the building(s) erected thereon
- Court
- Competition Tribunal
- Jurisdiction
- South Africa
- Case Number
- LM020May21
- Procedural Posture
- Merger Application / Order Issued After Hearing
- Outcome
- Merger approved unconditionally.
- Judges
- M Mazwai, F Tregenna, T Vilakazi
- Legal Topics
- Large Merger, Office Property Market, Public Interest Assessment, Merger Clearance, Vertical and Horizontal Overlap
Source-derived case record
Summary, issues, holding and outcome
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Parties
Government Employee Pension Fund (represented by the Public Investment Corporation SOC Ltd)
Applicant
The Leasehold Rights (and obligations) in respect of the immovable property situated at Erf 4525 Jukskei View Extension 89 Township and letting enterprise conducted in respect of the building(s) erected thereon
Respondent
Procedural Posture
Merger Application / Order Issued After Hearing
Legal Issues
- 1 Whether the proposed merger is likely to substantially prevent or lessen competition in any relevant market.
- 2 Whether the merger raises any public interest concerns under the Competition Act.
- 3 Whether there are any horizontal or vertical overlaps between the merging parties.
Ratio Decidendi
The Tribunal found that the Government Employee Pension Fund Group does not own or have interests in firms that own Grade P office space, and the Deloitte Lease establishes Deloitte as the sole tenant in the building. There are no horizontal or vertical overlaps between the merging parties, and the transaction does not raise any public interest concerns. No third parties raised objections, and the merging parties confirmed that no retrenchments would occur. Accordingly, the Tribunal concluded that the proposed transaction is unlikely to substantially prevent or lessen competition in any relevant market and approved the merger unconditionally.
Court Disposition
Merger approved unconditionally.
Orders
- The merger between the abovementioned parties is approved in terms of section 16(2)(a) of the Competition Act, 1998.
- A Merger Clearance Certificate is to be issued in terms of Competition Tribunal Rule 35(5)(a).
Full Case Text
Judgment text and source record
50 paragraphs
COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No.: LM020May21
In the matter between:
The Government Employee Pension Fund
(represented by the Public Investment Corporation SOC Ltd) Primary Acquiring Firm
And
The Leasehold Rights (and obligations) in respect of the immovable
property situated at Erf 4525 Jukskei View Extension 89 Township
and letting enterprise that is being conducted in respect of the building(s)
erected thereon Primary Target Firm
Panel: M Mazwai (Presiding Member)
F Tregenna (Tribunal Panel Member)
T Vilakazi (Tribunal Panel Member)
Heard on: 23 June 2021
Order Issued on: 23 June 2021
ORDER
Further to the recommendation of the Competition Commission in terms of section 14A(1)(b) of the Competition Act, 1998 (âthe Actâ) the Competition Tribunal orders thatâ
1. the merger between the abovementioned parties be approved in terms of section 16(2)(a) of the Act; and
2. a Merger Clearance Certificate be issued in terms of Competition Tribunal Rule 35(5)(a).
23 June 2021
Presiding Member Date
Ms Mondo Mazwai
Concurring: Prof. Fiona Tregenna and Dr. Thando Vilakazi
Case no: LM020May21
The Government Employee Pension Fund (represented by the Public Investment
Corporation SOC Limited) (Primary Acquiring Firm)
and
The Leasehold Rights (and obligations) in respect of the immovable property
situated at Erf 4525 Jukskei View Extension 89 Township and the letting enterprise
that is being conducted in respect of the building(s) erected thereon (Primary Target
Firm)
Heard on: 23 June 2021
Order Issued on: 23 June 2021
REASONS FOR DECISION
[1] On 23 June 2021, the Competition Tribunal unconditionally approved a large merger whereby the Government Employee Pension Fund (represented by the Public Investment Corporation SOC Limited) (the âGEPFâ) intends to acquire the Leasehold Rights (and obligations) in respect of the immovable property situated at Erf 4525 Jukskei View Extension 89 Township (the âDeloitte Propertyâ) and letting enterprise that is being conducted in respect of the building(s) erected thereon (the âDeloitte Property Businessâ), as a going concern.[1]
[2] The GEPF is not controlled by any firm, but is managed by the Public Investment Corporation SOC Limited (the âPICâ), which is wholly owned by the South African Government. The GEPF controls a number of firms, none of which are relevant to this transaction.[2]
[3] Pre-merger, the Target Firm is jointly controlled by Dale Creek Investments (Pty) Ltd and Attacq Waterfall Investment Company (Pty) Ltd, and does not control any firm.
[4] The GEPF Group is a âdefined-benefit fundâ which manages pensions and related benefits on behalf of government employees in South Africa, investing in a variety of asset classes and businesses within various industries. Of relevance, is the fact that the GEPF Group owns office properties or has interests in firms that are active in the property sector, namely through the ownership and/or provision of rentable office space in the Gauteng province.
[5] The Deloitte Property has a gross lettable area of 44,265m2 that is classified as Grade P (premium) office space, and which is in terms of the Deloitte Lease, currently being leased exclusively to Deloitte for a period of 12 years, ending on 31 March 2032.[3]
[6] In its competition assessment, the Competition Commission (the âCommissionâ) found that there are no horizontal overlaps as the GEPF Group does not own or have interests in firms that own Grade P office space, that could be considered a competitor of the Target Firm, and the Deloitte Lease establishes Deloitte as the sole tenant in the Deloitte Building. In addition, the Commission found no vertical overlaps in the activities of the merging parties as none provide a product or service that could be deemed as an input in the business activities of the other. The Commission concluded that the proposed transaction is unlikely to substantially lessen or prevent competition in any South African market.
[7] The proposed merger raises no public interest concerns, and no third parties raised any concerns. Further, the merging parties provided an unequivocal statement that there will be no retrenchments as a result of the merger.
[8] 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.
Ms Mondo Mazwai Date
Dr Thando Vilakazi and Prof. Fiona Tregenna concurring
Tribunal Case Manager: Camilla Mathonsi
For the Merging Parties: Darren Smith, HB Senekai, Duran Naidoo and Jeremy de Beer of ENSafrica
For the Commission: Rethabile Ncheche and Ratshidaho Maphwanya
[1] Collectively referred to as the Target Firm.
[2] The GEPF and all its subsidiaries will be collectively referred to as the âGEPF Groupâ.
[3] Deloitte has the option to renew the Deloitte Lease for two additional, consecutive 5-year periods, which would result in Deloitte occupying the Deloitte Building until either March 2037 or March 2042.