Government Employees Pension Fund v Certain Properties in Zenprop Portfolio (116/LM/OCT08) [2009] ZACT 6 (23 January 2009)

Government Employees Pension Fund v Certain Properties in Zenprop Portfolio (116/LM/OCT08) [2009] ZACT 6 (23 January 2009)

The Tribunal found that, although the combined post-merger market share for Grade A office space in Midrand was initially high, the anticipated entry of new developments would reduce this share significantly. The presence of other active competitors and the sophistication of tenants in negotiating rental levels further mitigated any risk of increased pricing power by the merged entity. No evidence was presented to suggest that the merger would result in a substantial lessening or prevention of competition, nor were there any public interest concerns. Accordingly, the merger was approved without conditions.

Citation
[2009] ZACT 6
Parties
Applicant: Government Employees Pension Fund; Respondent: Certain Properties in Zenprop Portfolio
Court
Competition Tribunal
Jurisdiction
South Africa
Judgment Date
23 January 2009
Case Number
116/LM/OCT08
Procedural Posture
Merger Application / Approval
Outcome
Merger approved without conditions.
Judges
N Manoim, Y Carrim, M Mokuena
Legal Topics
Property Merger, Market Share Analysis, Substantial Lessening of Competition, Public Interest, Office Space Market, Pricing Power
Competition Law Commercial and Corporate Land and Property Property Merger Market Share Analysis Substantial Lessening of Competition Public Interest Office Space Market +1 more

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Parties

Government Employees Pension Fund

Applicant

Certain Properties in Zenprop Portfolio

Respondent

Procedural Posture

Merger Application / Approval

Legal Issues

  1. 1 Whether the proposed property merger would result in a substantial lessening or prevention of competition in the relevant market.
  2. 2 Whether the merger would enable the merged entity to exercise pricing power in Grade A office space in Midrand.
  3. 3 Whether there are any public interest concerns arising from the merger.

Ratio Decidendi

The Tribunal found that, although the combined post-merger market share for Grade A office space in Midrand was initially high, the anticipated entry of new developments would reduce this share significantly. The presence of other active competitors and the sophistication of tenants in negotiating rental levels further mitigated any risk of increased pricing power by the merged entity. No evidence was presented to suggest that the merger would result in a substantial lessening or prevention of competition, nor were there any public interest concerns. Accordingly, the merger was approved without conditions.

Court Disposition

Merger approved without conditions.

Orders

  • The merger between Government Employees Pension Fund and Certain Properties in Zenprop Portfolio is approved without conditions.