Government Employees Pension Fund and Another v Lexshell 44 General Trading (Pty) Ltd (16/LM/MAR11) [2011] ZACT 27; [2011] 1 CPLR 132 (CT) (26 May 2011)

Government Employees Pension Fund and Another v Lexshell 44 General Trading (Pty) Ltd (16/LM/MAR11) [2011] ZACT 27; [2011] 1 CPLR 132 (CT) (26 May 2011)

The Tribunal found that the combined market shares of the merging parties in the relevant markets for rentable retail and office space were not sufficient to substantially lessen or prevent competition. The presence of alternative shopping centres and office spaces provided tenants with countervailing power. The Tribunal was concerned about the possibility of coordinated effects arising from PIC's ability to appoint directors to both Lexshell and Pareto, which could facilitate information exchange between competitors. However, the undertaking by PIC to prevent any individual from serving on both boards was accepted as a sufficient condition to mitigate this risk. No public interest...

Citation
[2011] ZACT 27
Parties
Applicant: Government Employees Pension Fund; Applicant: Growthpoint Properties Limited; Respondent: Lexshell 44 General Trading (Pty) Ltd
Court
Competition Tribunal
Jurisdiction
South Africa
Judgment Date
26 May 2011
Case Number
16/LM/MAR11
Procedural Posture
Large Merger Review / Approval With Conditions
Outcome
Merger approved subject to condition preventing dual board appointments by PIC.
Judges
Norman Manoim, Yasmin Carrim, Andreas Wessels
Legal Topics
Horizontal Merger, Coordinated Effects, Market Share Analysis, Director Appointments, Information Exchange
Competition Law Commercial and Corporate Horizontal Merger Coordinated Effects Market Share Analysis Director Appointments Information Exchange

Case Brief

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Parties

Government Employees Pension Fund

Applicant

Growthpoint Properties Limited

Applicant

Lexshell 44 General Trading (Pty) Ltd

Respondent

Procedural Posture

Large Merger Review / Approval With Conditions

Legal Issues

  1. 1 Whether the proposed merger would substantially lessen or prevent competition in the relevant markets.
  2. 2 Whether the appointment of directors by PIC could facilitate information exchange between competitors.
  3. 3 Whether any public interest concerns, such as retrenchments, arise from the merger.

Ratio Decidendi

The Tribunal found that the combined market shares of the merging parties in the relevant markets for rentable retail and office space were not sufficient to substantially lessen or prevent competition. The presence of alternative shopping centres and office spaces provided tenants with countervailing power. The Tribunal was concerned about the possibility of coordinated effects arising from PIC's ability to appoint directors to both Lexshell and Pareto, which could facilitate information exchange between competitors. However, the undertaking by PIC to prevent any individual from serving on both boards was accepted as a sufficient condition to mitigate this risk. No public interest...

Court Disposition

Merger approved subject to condition preventing dual board appointments by PIC.

Orders

  • The merger between Government Employees Pension Fund, Growthpoint Properties Limited, and Lexshell 44 General Trading (Pty) Ltd is approved subject to the condition that for as long as PIC is a shareholder in Lexshell and holds a minority interest in Pareto, any individual appointed by PIC to serve on the board or...