Government Employees Pension Fund v Menlyn Maine Investment Holdings (Pty) Ltd (LM009Apr21) [2021] ZACT 51 (27 July 2021)
- Citation
- [2021] ZACT 51
- Status
- Order
- Jurisdiction
- South Africa
- Court
- Competition Tribunal
- Panel
- Enver Daniels, Imraan Valodia, Thando Vilakazi
- Case number
- LM009Apr21
More details
- Court
- Competition Tribunal
- Panel
- Enver Daniels, Imraan Valodia, Thando Vilakazi
- Case number
- LM009Apr21
On this page
Professional case brief
Research organized from the available case record
01
Holding and result
The Tribunal found that although the Government Employees Pension Fund holds interests and appoints directors in competing firms, the parties have implemented sufficient internal measures, such as the Integrity Walls Policy and structural separation of management divisions, to prevent the exchange of sensitive information and coordinated effects. The target property is unlisted, further reducing the risk of information sharing with listed competitors. The Tribunal accepted the Commission's assessment that the merger is unlikely to substantially prevent or lessen competition in any relevant market and does not raise public interest concerns. Accordingly, the merger was approved unconditionally.
Court disposition
Merger approved unconditionally.
Orders
- The merger between Government Employees Pension Fund and Menlyn Maine Investment Holdings (Pty) Ltd 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).
02
Material facts
Parties
Government Employees Pension Fund
Applicant Counsel: Andries Le Grange and Nelisiwe KhumaloMenlyn Maine Investment Holdings (Pty) Ltd
Respondent Counsel: Andries Le Grange and Nelisiwe KhumaloAmounts and remedies
- Willow Way Shopping Centre GLA (square Meters): 7,933
- Brooklyn Mall GLA (square Meters): 81,850
03
Procedural history
Posture
Merger Clearance Application / Order Issued After Hearing
04
Questions and positions
Legal issues
- 01
Whether the proposed merger is likely to substantially prevent or lessen competition in any relevant market.
- 02
Whether the merger raises any public interest concerns.
- 03
Whether cross-shareholding and director appointments create coordinated effects or information sharing risks.
Party arguments
- Applicant
- The Government Employees Pension Fund, represented by the Public Investment Corporation, argued that the acquisition of sole control over the target property would not result in anti-competitive effects. They submitted that the property assets involved are managed in separate divisions and that internal policies, such as the Integrity Walls Policy, prevent the exchange of sensitive information between competing firms. The applicant maintained that the transaction would not negatively impact competition or public interest.
- Respondent
- The Competition Commission raised concerns regarding potential coordinated effects due to the GEPF's cross-shareholding and ability to appoint directors in competing firms. However, the Commission acknowledged that the target property is unlisted, while Growthpoint is listed, and that the parties have implemented sufficient measures to prevent information sharing. The Commission ultimately concluded that the merger is unlikely to substantially prevent or lessen competition and does not raise public interest concerns.
05
Court’s reasoning
Legal principles
- 01
Competition Act, 1998, section 16(2)(a)
A merger may not be approved if it is likely to substantially prevent or lessen competition, unless there are sufficient measures to alleviate such concerns.
- 02
Competition Tribunal reasoning; see also prior merger decisions
The existence of cross-shareholding and director appointments may raise coordinated effects concerns, but these can be mitigated by internal policies and structural separation.
- 03
Competition Act, 1998, section 12A
Public interest considerations must be assessed in all merger applications, including the impact on employment, small businesses, and the ability of firms to compete.
06
Ratio, limits and disposition
Ratio decidendi
The Tribunal found that although the Government Employees Pension Fund holds interests and appoints directors in competing firms, the parties have implemented sufficient internal measures, such as the Integrity Walls Policy and structural separation of management divisions, to prevent the exchange of sensitive information and coordinated effects. The target property is unlisted, further reducing the risk of information sharing with listed competitors. The Tribunal accepted the Commission's assessment that the merger is unlikely to substantially prevent or lessen competition in any relevant market and does not raise public interest concerns. Accordingly, the merger was approved unconditionally.
Obiter and limits
- The Tribunal noted that the size and nature of Willow Way Shopping Centre, controlled by SA Corporate, does not constitute a competitive constraint to the target property.
- The Tribunal observed that the proximity of Brooklyn Mall, controlled by Growthpoint, was considered, but the measures in place were deemed sufficient to address any potential coordinated effects.
Court disposition
Merger approved unconditionally.
- The merger between Government Employees Pension Fund and Menlyn Maine Investment Holdings (Pty) Ltd 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).
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.: LM009Apr21
In the matter between:
Government Employees Pension Fund
Primary Acquiring Firm
And
Menlyn Maine Investment Holdings (Pty) Ltd
Primary Target Firm
Panel:
Mr Enver Daniels (Presiding Member)
Prof Imraan Valodia (Tribunal Member)
Dr Thando Vilakazi (Tribunal Member)
Heard on: 27 July 2021
Order Issued on: 27 July 2021
ORDER
Further to the recommendation of the Competition Commission in terms of section 14A(1)(b) of the Competition Act, 1998 (“the Act”) the Competition Tribunal orders that–
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).
Presiding Member
Mr Enver Daniels
27 July 2021
Date
Concurring: Prof Imraan Valodia and Dr Thando Vilakazi
Case no: LM009Apr21
Government Employees Pension Fund (Primary Acquiring Firm)
and
Menlyn Maine Investment Holdings (Pty) Ltd (Primary Target Firm)
Heard on: 27 July 2021
Order Issued on: 27 July 2021
REASONS
FOR DECISION
[1] On 27 July 2021, the Competition Tribunal unconditionally approved a large merger between the Government Employees Pension Fund (“GEPF”) and Menlyn Maine Investment Holdings (Pty) Ltd (“MMIH”).
[2] GEPF intends to acquire sole control over MMIH’s undivided
share of Redevelopment Erf 3 and its share of the rental enterprise known as Central Square, Menlyn Maine ("Target Property").
[3] The GEPF is represented by the Public Investment Corporation SOC Ltd ("PIC") and controlled by its Board of Trustees. The GEPF holds interests in multiple firms, including MMIH. The PIC is controlled by the South African government.
[4] Pre-merger, the shares in MMIH are held by African Spirit Trading 306 (Pty) Ltd, Kgwara Investments (Pty) Ltd, Henk Boogertman, GEPF, and African Spirit Trading 309 (Pty) Ltd.
[5] The GEPF is a defined benefit pension fund that manages and administers pensions and other benefits for government employees in South Africa. The PIC, on behalf of the GEPF, invests in various classes of assets including equities, property and fixed income.
[6] The Target Property comprises of a retail component, a gymnasium,
office space, and retail/business premises.
[7] When assessing the merging parties’ activities, the Commission
identified a horizontal overlap as the GEPF holds controlling and non-controlling interests in various firms that are active in the property industry, and which compete with the Target Property. This finding raised a concern in relation to potential coordinated effects through information sharing, that may arise as a result of GEPF’s cross shareholding in competing firms.
[8] In assessing the potential coordinated effects of the proposed transaction, the Commission noted that, as a shareholder in multiple
firms that compete with the Target Property, the GEPF has the ability to appoint directors in numerous firms in which it holds shares. The Commission highlighted two firms in which the GEPF can appoint directors or has control: SA Corporate Real Estate[1] (in which the GEPF has a non - controlling interest and one director) and Growthpoint[2] (in which the GEPF also has a non - controlling interest and one director).
[9] Because the Target Property competes with Brooklyn Mall, which is
controlled by Growthpoint and on whose board the PIC is represented, the Commission considered the extent to which coordinated effects could arise. In addressing this concern, the Commission considered the PIC’s Integrity Walls Policy (“the Policy”),
[….] The Commission therefore highlighted the fact that, because the Target Property is unlisted, while Growthpoint is listed,
[….] any sensitive information will not be exchanged. [….]
[10] Based on the fact that the Target Property and Growthpoint will be managed in separate divisions, and the [….] the Commission is of the view that there are sufficient measures in place to alleviate any information sharing concerns that might arise as a result of the proposed transaction.
[11] The Commission was therefore of the view that the proposed merger is unlikely to substantially prevent or lessen competition.
[12] The merger raises no public interest concerns.
[13] We concluded that the proposed transaction is unlikely to substantially prevent or lessen competition in any relevant market, or to have a negative impact on public interest.
Signed by:Enver Daniels
Signed at:2021-07-27 16:54:20 +02:00
Reason:Witnessing Enver Daniels
27 July 2021
Mr Enver Daniels
Date
Dr Thando Vilakazi and Prof Imraan Valodia concurring.
Tribunal Case Manager: Camilla Mathonsi
For the Merging Parties: Andries Le Grange and Nelisiwe Khumalo of CDH
For the Commission: Thabelo Masithulela and Sewela Moshoma
[1] SA Corporate controls Willow Way Shopping Centre which is considered a Neighbourhood Shopping Centre with a GLA of approximately 7 933 square meters and located 5.5km away from the Target Property. However, based on case law, Willow Way Shopping Centre cannot be considered as a competitive constraint due to its size.
[2] Growthpoint controls Brooklyn Mall which is located 6.1km away from the Target Property and which is considered a regional shopping
centre with a GLA of approximately 81 850 square metres.
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