Growthpoint Management Services (Propietary) Ltd and Fund Management Business; Property Administrators Business; and Buildmain Managers (Pty) Ltd (70/LM/Jul07) [2007] ZACT 90; [2008] 1 CPLR 105 (CT) (13 November 2007)

Growthpoint Management Services (Propietary) Ltd and Fund Management Business; Property Administrators Business; and Buildmain Managers (Pty) Ltd (70/LM/Jul07) [2007] ZACT 90; [2008] 1 CPLR 105 (CT) (13 November 2007)

The Tribunal found that clause 12.1 of the Sale of Business Agreement constituted a market division agreement prohibited by section 4(1)(b)(ii) of the Competition Act, as it restrained both Investec and Growthpoint from entering each other's markets, not merely the seller from re-entering. The renewal provisions in the Co-operation Agreement could perpetuate anti-competitive effects by allowing rights of first refusal to continue indefinitely. The Tribunal accepted the parties' undertakings to delete the offending clauses and limit the duration of the Co-operation Agreement to four years, with no renewal. With these amendments, the merger did not raise significant competition or public...

Citation
[2007] ZACT 90
Parties
Applicant: Growthpoint Management Services (Proprietary) Ltd; Respondent: Fund Management Business; Respondent: Property Administrators Business; Respondent: Buildmain Managers (Pty) Ltd
Court
Competition Tribunal
Jurisdiction
South Africa
Judgment Date
13 November 2007
Case Number
70/LM/Jul07
Procedural Posture
Merger Application / Reasons for Decision After Conditional Approval
Outcome
Merger conditionally approved subject to deletion of anti-competitive clauses and limitation of agreement duration.
Judges
U Bhoola, Y Carrim, M Holden
Legal Topics
Merger Control, Market Division, Restraint of Trade, Vertical Agreements
Competition Law Commercial and Corporate Merger Control Market Division Restraint of Trade Vertical Agreements

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Parties

Growthpoint Management Services (Proprietary) Ltd

Applicant

Fund Management Business

Respondent

Property Administrators Business

Respondent

Buildmain Managers (Pty) Ltd

Respondent

Procedural Posture

Merger Application / Reasons for Decision After Conditional Approval

Legal Issues

  1. 1 Whether the merger agreement contains provisions amounting to prohibited market division under section 4(1)(b)(ii) of the Competition Act.
  2. 2 Whether the restraint clauses in the Sale of Business Agreement and Co-operation Agreement are anti-competitive.
  3. 3 Whether the rights of first refusal and renewal provisions in the Co-operation Agreement could have ongoing anti-competitive effects.

Ratio Decidendi

The Tribunal found that clause 12.1 of the Sale of Business Agreement constituted a market division agreement prohibited by section 4(1)(b)(ii) of the Competition Act, as it restrained both Investec and Growthpoint from entering each other's markets, not merely the seller from re-entering. The renewal provisions in the Co-operation Agreement could perpetuate anti-competitive effects by allowing rights of first refusal to continue indefinitely. The Tribunal accepted the parties' undertakings to delete the offending clauses and limit the duration of the Co-operation Agreement to four years, with no renewal. With these amendments, the merger did not raise significant competition or public...

Court Disposition

Merger conditionally approved subject to deletion of anti-competitive clauses and limitation of agreement duration.

Orders

  • The entire paragraph 12.1 in the Sale of Business Agreement signed by the merging parties on 20 July 2007 is of no force and effect and shall be deleted forthwith.
  • Paragraph 10.2 in the Co-operation Agreement concluded between the merging parties on 20 July 2007 shall be deleted. The duration of the entire agreement shall be limited to four years and may not be extended or renewed.