Housing Impact Fund South Africa Trust v Mettle Property Solutions Securitisation (RF) Proprietary Limited (LM025MAY16) [2016] ZACT 54 (20 July 2016)
- Citation
- [2016] ZACT 54
- Status
- Judgment
- Jurisdiction
- South Africa
- Court
- Competition Tribunal
- Panel
- AW Wessels, Andiswa Ndoni, Fiona Tregenna
- Case number
- LM025MAY16
More details
- Court
- Competition Tribunal
- Panel
- AW Wessels, Andiswa Ndoni, Fiona Tregenna
- Case number
- LM025MAY16
On this page
Professional case brief
Research organized from the available case record
01
Holding and result
The Tribunal found that the proposed transaction would not alter the competitive structure of the relevant market, as HIFSA already exercises de facto control over Mettle and both firms are managed by the same entity. The horizontal overlap in the provision of finance to project companies does not raise competition concerns, and the vertical relationship does not result in foreclosure risks due to HIFSA's limited market share and Mettle's exclusive reliance on HIFSA for financing. No adverse public interest effects, including employment, were identified. Accordingly, the Tribunal approved the transaction unconditionally.
Court disposition
The proposed transaction is approved unconditionally.
Orders
- The merger between The Housing Impact Fund South Africa Trust and Mettle Property Solutions Securitisation (RF) Proprietary Limited is approved without conditions.
02
Material facts
Parties
The Housing Impact Fund South Africa Trust
Applicant Counsel: Xolani NyaliMettle Property Solutions Securitisation (RF) Proprietary Limited
Respondent03
Procedural history
Posture
Merger Approval / Final Determination
04
Questions and positions
Legal issues
- 01
Whether the proposed acquisition by HIFSA of the remaining shares in Mettle would substantially prevent or lessen competition in any relevant market.
- 02
Whether the transaction raises any public interest concerns, including employment effects.
Party arguments
- Applicant
- The applicant argued that acquiring the remaining shares in Mettle would allow HIFSA to continue supporting developments in which Mettle is invested. The transaction would not alter the competitive dynamics, as HIFSA already exercises de facto control over Mettle and both entities are managed by OMAI. No adverse employment effects or other public interest concerns would arise.
- Respondent
- The respondent, represented by the Competition Commission, contended that there is a horizontal overlap in the market for the provision of finance to project companies, but HIFSA already controls Mettle pre-merger. The vertical relationship, where HIFSA provides finance to Mettle for onward lending, does not raise foreclosure concerns due to HIFSA's small market share and Mettle's exclusive reliance on HIFSA for financing. The transaction is unlikely to substantially prevent or lessen competition or raise public interest concerns.
05
Court’s reasoning
Legal principles
- 01
Competition Act, 89 of 1998
A merger will not be prohibited unless it is likely to substantially prevent or lessen competition in any relevant market.
- 02
Competition Act, 89 of 1998
Public interest considerations, including employment effects, must be assessed in merger proceedings.
06
Ratio, limits and disposition
Ratio decidendi
The Tribunal found that the proposed transaction would not alter the competitive structure of the relevant market, as HIFSA already exercises de facto control over Mettle and both firms are managed by the same entity. The horizontal overlap in the provision of finance to project companies does not raise competition concerns, and the vertical relationship does not result in foreclosure risks due to HIFSA's limited market share and Mettle's exclusive reliance on HIFSA for financing. No adverse public interest effects, including employment, were identified. Accordingly, the Tribunal approved the transaction unconditionally.
Obiter and limits
- The Tribunal noted that the merging parties confirmed no retrenchments would result from the transaction.
- No other public interest concerns were identified beyond employment.
Court disposition
The proposed transaction is approved unconditionally.
- The merger between The Housing Impact Fund South Africa Trust and Mettle Property Solutions Securitisation (RF) Proprietary Limited is approved without conditions.
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
Case No: LM025May16
In the matter between:
THE
HOUSING
IMPACT
FUND
SOUTHAFRICA
TRUST Primary Acquiring Firm
and
METILE
PROPERTY SOLUTIONS
SECURITISATION (RF) PROPRIETARY
LIMITED Primary
Target Firm
Panel
:AW Wessels (Presiding Member)
:Andiswa Ndoni(Tribunal Member)
: Fiona Tregenna (Tribunal Member)
Heard on
: 29 June 2016
Order Issued on
: 29 June 2016
Reasons Issued on : 20 July 2016
Reasons for Decision
Approval
[1] On 29 June 2016, the Competition Tribunal ("Tribunal") approved the proposed transaction between The Housing Impact Fund South Africa Trust ("HIFSA") and Mettle Property Solutions Securitisation (RF) (Pty) Ltd ("Mettle").
[2] The reasons for approving the proposed transaction follow.
Parties to the proposed transaction
Primary acquiring firm
[3] The primary acquiring firm is HIFSA. HIFSA is a trust registered in terms of the laws of the Republic of South Africa. It is controlled by its trustees, Old Mutual Alternative Investments Proprietary Limited ("OMAI") in its capacity as Fund Manager and Old Mutual Investment Group Proprietary Limited ("OMIG") as a founding trustee. OMAI is a wholly-owned subsidiary of OMIG.
[4] HIFSA is a "development impact fund" which provides investments into the low income housing sector. HIFSA undertakes two types of investments: (i) it
invests in funds or companies that lend money to project companies which undertake property development projects; or (ii) it forms a project company with a property developer.
Primary target firm
[5] The primary target firm is Mettle, a private company incorporated in accordance with the company laws of the Republic of South Africa. Mettle is a special purpose vehicle established and owned by HIFSA as to 50%, Mettle Property Solutions ("MPS") as to 25% and Metropolitan Capital Economic Fund (Pty) Ltd ("MCEF") as to 25%.
[6] Mettle is a fund similar to HIFSA, invested in various residential low-income property development projects across South Africa. It originates and finances low-income property development projects.
Proposed transaction and rationale
[7]
HIFSA intends to acquire the remaining issued share capital of Mettle by increasing its shareholding in Mettle from 50% to 100%.This will result in HIFSA having sole control over Mettle post-transaction.
[8] According to the merging parties, the proposed transaction will inter a/ia enable
HIFSA to continue supporting the developments in which Mettle is invested.
Impact on competition
[9] The Competition Commission ("Commission") identified a horizontal overlap between the activities of the merging parties in the market for the provision of finance to project companies in South Africa.
[10] The Commission found that HIFSA pre-merger already has de facto control over Mettle and furthermore that both these firms are manged by OMAI. Thus the status quo remains post-merger and the proposed transaction therefore is unlikely to change the structure of the relevant market.
[11] The Commission also identified a vertical relationship between the merging parties since HIFSA provides finance to Mettle for onwards lending to project companies. The Commission however found that this vertical overlap is unlikely to result in any foreclosure concerns since
HIFSA is a small player in the provision of finance in South Africa. The Commission also found that customer foreclosure is unlikely since Mettle pre-merger sourced financing only from HIFSA.
[12] Accordi ngly, the Commission concluded that the proposed transaction is unlikely to substantially prevent or lessen competition in any relevant market. We concur with this finding.
Public interest
[13] The merging parties confirmed that the proposed transaction will have no adverse effects on employment and that no retrenchments are expected as a consequence of the transaction.[1]
[14] No other public interest concerns arise from the proposed transaction.
Conclusion
[15] In light of the above, we conclude that the proposed transaction is unlikely to substantially prevent or lessen competition in any relevant market. In addition, no public interest issues arise from the proposed transaction. Accordingly we approve the proposed transaction unconditionally.
20 Jul y 2016
DATE
_____
Mr AW Wessels
Prof Fiona Tregenna and Ms Andiswa Ndoni concurring
Case Manager : Hayley Lyle
For the merging parties: Xolani Nyali of Bowman Gilfillan
For the Commission: Billy Mabatamela
[1] Merger Record, inter alia page 17.
Case-aware research
Ask AI about this case
The judgment and available research above are public. New questions open in a separate private conversation grounded in this case.