Government Employees Pension Fund v Trevenna Precinct Office Development (68/LM/Jun08) [2008] ZACT 74 (12 September 2008)
- Citation
- [2008] ZACT 74
- Status
- Judgment
- Jurisdiction
- South Africa
- Court
- Competition Tribunal
- Panel
- N Manoim, U Bhoola, Y Carrim
- Case number
- 68/LM/Jun08
More details
- Court
- Competition Tribunal
- Panel
- N Manoim, U Bhoola, Y Carrim
- Case number
- 68/LM/Jun08
On this page
Professional case brief
Research organized from the available case record
01
Holding and result
The Tribunal found that the combined market share of the merging parties in the relevant market for grade A office properties in Pretoria and surrounding nodes would be 7.8% post-merger. This market share is considered low and does not raise competition concerns. The Tribunal agreed with the Competition Commission's analysis that the transaction would not result in a substantial lessening or prevention of competition. Furthermore, no public interest issues were identified that would warrant prohibition or conditions. Accordingly, the merger was approved unconditionally.
Court disposition
Merger approved unconditionally; no substantial lessening or prevention of competition found.
Orders
- The merger between Government Employees Pension Fund and Trevenna Precinct Office Development is approved unconditionally.
- No conditions are imposed on the transaction.
02
Material facts
Parties
Government Employees Pension Fund
Applicant Counsel: Jowell Glyn Marais IncTrevenna Precinct Office Development
RespondentAmounts and remedies
- Post Merger Combined Market Share: 7.8
03
Procedural history
Posture
Merger Clearance / Decision on Unconditional Approval
04
Questions and positions
Legal issues
- 01
Whether the proposed merger would result in a substantial lessening or prevention of competition in the relevant market.
- 02
Whether there are any public interest concerns arising from the transaction.
Party arguments
- Applicant
- The Government Employees Pension Fund, represented by the Public Investment Corporation, argued that the transaction is part of its property investment strategy to increase holdings in fixed properties. The acquisition of a 51% interest in Trevenna Precinct Office Development would allow the GEPF to diversify its asset portfolio and attract quality tenants, particularly government departments and quasi-government institutions, thereby securing long-term lease agreements.
- Respondent
- Trevenna Precinct Office Development and its shareholders contended that the transaction would enable them to realize a portion of their investment. They further argued that partnering with the GEPF/PIC would enhance the attractiveness of the property to government-related tenants, facilitating the conclusion of favorable long-term leases and improving the overall value proposition of the development.
05
Court’s reasoning
Legal principles
- 01
Competition Act 89 of 1998
A merger may only be prohibited if it is likely to substantially prevent or lessen competition in the relevant market.
- 02
Competition Commission Guidelines
The assessment of market share post-merger is a key factor in determining the likelihood of anti-competitive effects.
06
Ratio, limits and disposition
Ratio decidendi
The Tribunal found that the combined market share of the merging parties in the relevant market for grade A office properties in Pretoria and surrounding nodes would be 7.8% post-merger. This market share is considered low and does not raise competition concerns. The Tribunal agreed with the Competition Commission's analysis that the transaction would not result in a substantial lessening or prevention of competition. Furthermore, no public interest issues were identified that would warrant prohibition or conditions. Accordingly, the merger was approved unconditionally.
Obiter and limits
- The Tribunal noted that the involvement of government-related entities as tenants may enhance the stability and attractiveness of the property investment but does not, in itself, raise competition concerns.
- The Tribunal observed that the asset portfolios of pension funds are increasingly diversified, including various classes of property nationwide.
Court disposition
Merger approved unconditionally; no substantial lessening or prevention of competition found.
- The merger between Government Employees Pension Fund and Trevenna Precinct Office Development is approved unconditionally.
- No conditions are imposed on the transaction.
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
Judgment
COMPETITION
TRIBUNAL OF SOUTH AFRICA
In the matter between:
Case No: 68/LM/Jun08
Government Employees Pension Fund Acquiring firm
And
Trevenna Precinct Office Development Target firms
Panel : N Manoim (Presiding Member); U Bhoola (Tribunal Member) and Y Carrim (Tribunal Member)
Heard on : 14 August 2008
Decided : 14 August 2008
Reasons Issued : 12 September 2008
Reasons for Decision
Approval
[1] On 14 August 2008 the Competition Tribunal issued a Merger Clearance Certificate approving the merger between Government Employees Pension Fund and Trevenna Precinct Office Development unconditionally. The reasons appear below.
Parties
[2] The primary acquiring firm is Government Employees Pension Fund (“GEPF)”, a juristic person established by section 2 of the Government Employees Pension Fund Law Act 21 of 1996. The Public Investment Corporation Ltd (“PIC”) is a duly authorised representative of the GEPF.1 The entire issued share capital of the PIC is held by the Government of the Republic of South Africa and its representative is the Minister of Finance.
[3] The primary target firm is Trevenna Precinct Office Development (“Trevenna”). Trevenna is wholly controlled by Trevenna
Development Co (Pty) Ltd. 2
Transaction
[4] In terms of the agreement entered into between the GEPF, represented by PIC, and Trevenna Development Co (Pty) Ltd, GEPF would acquire an undivided 51% interest in the letting enterprise known as Trevenna.
Rationale of transaction
[5] From the GEPF/PIC perspective the transaction forms part of the PIC’s property strategy to increase its investment in fixed properties.
[6] From the sellers perspective the rationale is two fold. Firstly the transaction provides an opportunity for the current shareholders to realise a portion of their investment. Secondly the PIC and Government have the ability to attract quality, tenants in the form
of government departments or quasi government institutions and hence partnering with the GEPF/PIC allows the conclusion of attractive long term lease agreements.
Parties Activities
[7] The parties submit that the GEPF is a pension fund which owns various assets which are managed by the PIC. According to the parties the GEPF assets are invested in various assets classes including equities, fixed interests instrument, money market instruments and properties.3
[8] Trevenna is a grade A office property development located in Sunnyside, Pretoria.
Competition Analysis
[9] The transaction results in an overlap in the activities of the merging parties in respect of grade A office properties. According to the parties the acquiring firm’s grade A office property is in Hatfield and Trevenna and the target firm’s property is situated in Sunnyside. An examination of the market by the Commission revealed that post merger the merging parties will have 7.8% combined market share in the broader node including Pretoria CBD, Sunnyside, Arcadia and Hatfield/Hillcrest. We agree with the Commission that the post merger market share is relatively low to raise any competition concerns.
Conclusion
[10] Based on the above the transaction will not result in a substantial lessening or prevention of competition and is accordingly approved unconditionally. In addition there are no public interest issues.
_______ 12 September 2008
Y Carrim Date
Tribunal Member
U Bhoola and N Manoim concurring
Tribunal Researcher : Jabulani Ngobeni
For the merging parties : Jowell Glyn Marais Inc
For the Commission : Linda Chung (Mergers and Acquisitions)
1 The PIC was created by the Public Investment Corporation Act 23 of 2004 and is authorized to provide for the investment of certain money received or held by or on behalf of the Government of the Republic
of South Africa and certain other bodies, councils and funds.
2 The shareholders of Trevenna development Co are Atterbury Property (Pty)Ltd 27.5%; Village Trust 25%; Atterbury Property Development
(Pty)Ltd 10%; Attacq Property Fund Ltd 10%; Atterbury Property Holdings (Pty)Ltd 10%; Sudden Impact Investments 4 (Pty)Ltd 8%; HC Bezuidenhout 6% and PJ Jordaan 3.5%.
3 The parties submit that the properties that form part of the asset portfolio include office property, retail property, industrial property and residential property located in most provinces nationwide.
3
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