Growpoint Healthcare Property Holdings Limited v Romed Properties Proprietary Limited in respect of the immovable property on which Hillcrest Private Hospital is located and the immovable property on which Gateway Private Hospital is located (LM106Sep16) [2016] ZACT 99 (9 November 2016)
The Tribunal found that the proposed transaction gives rise to a horizontal overlap in the market for the provision of hospital property. However, due to the significant geographical distance between Growthpoint's hospital property in Cape Town and the Target Properties in KwaZulu Natal, there is no geographical...
Source-derived case information.
- Citation
- [2016] ZACT 99
- Parties
- Applicant: Growthpoint Healthcare Property Holdings Limited; Respondent: Romed Properties Proprietary Limited
- Court
- Competition Tribunal
- Jurisdiction
- South Africa
- Case Number
- LM106Sep16
- Procedural Posture
- Merger Control / Approval of Large Merger
- Outcome
- Merger approved unconditionally.
- Judges
- Mondo Mazwai, lmraan Valodia, Yasmin Carrim
- Legal Topics
- Merger Control, Horizontal Overlap, Relevant Product Market, Public Interest, Competition Assessment
Source-derived case record
Summary, issues, holding and outcome
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Parties
Growthpoint Healthcare Property Holdings Limited
Applicant
Romed Properties Proprietary Limited
Respondent
Procedural Posture
Merger Control / Approval of Large Merger
Legal Issues
- 1 Whether the proposed merger between Growthpoint and Romed in respect of the Target Properties is likely to substantially prevent or lessen competition in the relevant market.
- 2 Whether the transaction raises any public interest concerns, including adverse impact on employment.
Ratio Decidendi
The Tribunal found that the proposed transaction gives rise to a horizontal overlap in the market for the provision of hospital property. However, due to the significant geographical distance between Growthpoint's hospital property in Cape Town and the Target Properties in KwaZulu Natal, there is no geographical overlap. The Commission's assessment that the transaction is unlikely to substantially prevent or lessen competition was accepted. Furthermore, the merging parties demonstrated that there would be no adverse impact on employment or other public interest concerns. Accordingly, the Tribunal approved the merger unconditionally.
Court Disposition
Merger approved unconditionally.
Orders
- The proposed transaction between Growthpoint Healthcare Property Holdings Limited and Romed Properties Proprietary Limited in respect of the Target Properties is approved unconditionally.
Full Case Text
Judgment text and source record
46 paragraphs
COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No:LM106Sep16
In the matter between:
Growthpoint Healthcare Property Holdings Limited
Primary Acquiring Firm
and
Romed Properties Proprietary Limited in respect of the Primary Target Firm
immovable property on which Hillcrest Private Hospital is
located and the immovable property on which Gateway
Private Hospital is located
Panel
: Mondo Mazwai (Presiding Member)
: lmraan Valodia (Tribunal Member)
: Yasmin Carrim (Tribunal Member)
Heard on
: 12 October 2016
Order Issued on
: 12 October 2016
Reasons Issued on : 09 November 2016
Reasons for Decision
Approval
[1] On 12 October 2016, the Competition Tribunal ("Tribunal") unconditionally approved a large merger between Growthpoint
Healthcare Property Holdings Limited ("Growthpoint") and Romed Properties Proprietary Limited (''Romed") in respect of the immovable property on which Hillcrest Private Hospital is located and the immovable property on which Gateway Private Hospital is located (“Target Properties"). The reasons for approving the proposed transaction follow.
Parties to the transaction
[2] The primary acquiring firm is Growthpoint, a property investment holding company which is listed as a Real Estate Investment Trust ("REIT") on the Johannesburg Securities Exchange Limited. Growthpoint's property portfolio consists of rentable retail, office and industrial space located in the Western Cape, Eastern Cape, Gauteng and KwaZulu Natal provinces. Growthpoint also indirectly holds rentable residential space. Of relevance to the proposed transaction is Growthpoint's hospital property located in Cape Town in the Western Cape Province.
[3] The Target Properties are letting enterprises located in the KwaZulu Natal province and owned by Romed. Romed has no subsidiaries and does not directly or indirectly control any firm.
Proposed transaction
[4] Through a Letting Enterprise Agreement, Growthpoint intends to acquire the Target properties, such that post-merger Growthpoint will control the Target Properties. Growthpoint is not acquiring the hospital licences pertaining to the hospitals, only the properties on which the private hospitals are situated [1].
Impact on competition
[5] The proposed transaction gives rise to a horizontal overlap.
[6] The Competition Commission ("the Commission") identified the relevant product market as the market for the provision of hospital property. The Commission found that the distance between Growthpoint's hospital property in Cape Town and the Target
Properties in KwaZulu Natal is more than 1000 kilometers apart. The Commission thus concluded that no geographical overlap occurs as a result of the proposed transaction. The Commission further concluded that the proposed transaction was unlikely to substantially prevent or lessen competition in the identified market.
[7] We agree with the Commission's competition assessment and conclusion.
Public interest
[8] The merging parties submitted that the proposed transaction will not result in any adverse impact on employment. The proposed transaction further raises no other public interest concerns.
Conclusion
[9] In light of the above, we conclude that the proposed transaction is unlikely to substantially prevent or lessen competition in the identified market. In addition, no public interest issues arise from the proposed transaction. Accordingly, we approve the proposed transaction unconditionally.
09 November 2016
DATE
_____________________
Ms Mondo Mazwai
Prof. lmraan Valodia and Ms Yasmin Carrim concurring
Tribunal Researcher: Caroline Sserufusa
For the merging parties: Johan Coetzee of Glyn Marais Inc. Attorneys
For the Commission: Boitumelo Makgabo
[1] The hospital licences are the subject of a separate notification filed with the Commission.