Huawei Technologies South Africa (Pty) Ltd v Growthpoint Properties Limited; In re: Harrowdene Office Park (LM201Jan17) [2017] ZACT 11 (15 February 2017)
- Citation
- [2017] ZACT 11
- Status
- Judgment
- Jurisdiction
- South Africa
- Court
- Competition Tribunal
- Panel
- Mondo Mazwai, Andiswa Ndoni, Medi Mokuena
- Case number
- LM201Jan17
More details
- Court
- Competition Tribunal
- Panel
- Mondo Mazwai, Andiswa Ndoni, Medi Mokuena
- Case number
- LM201Jan17
On this page
Professional case brief
Research organized from the available case record
01
Holding and result
The Tribunal found that the proposed transaction does not result in any horizontal overlaps, as Huawei SA does not own any Grade A office properties in South Africa. The acquisition is for Huawei SA's own operational use and not for property letting. The Commission confirmed that there are no negative public interest effects. Therefore, the transaction is unlikely to substantially prevent or lessen competition in any relevant market, and no public interest concerns arise. The Tribunal approved the transaction unconditionally.
Court disposition
The merger is approved unconditionally.
Orders
- The proposed transaction between Huawei Technologies South Africa (Pty) Ltd and Growthpoint Properties Limited in respect of Harrowdene Office Park is approved unconditionally.
02
Material facts
Parties
Huawei Technologies South Africa (Pty) Ltd
Applicant Counsel: Vani ChettyGrowthpoint Properties Limited
Respondent03
Procedural history
Posture
Merger Approval / Decision on Approval
04
Questions and positions
Legal issues
- 01
Does the proposed acquisition of Harrowdene Office Park by Huawei Technologies South Africa (Pty) Ltd substantially prevent or lessen competition in any relevant market?
- 02
Are there any negative public interest effects arising from the transaction?
Party arguments
- Applicant
- Huawei SA argued that the acquisition is necessary to centralise its operations and establish a local brand image, as it has outgrown its current leased properties. The property will be used as its head office and not as a property letting enterprise. The transaction does not create any horizontal overlaps, as Huawei SA does not own any Grade A office properties in South Africa.
- Respondent
- Growthpoint Properties Limited submitted that the transaction is an attractive offer allowing for the realisation of its investment in the property. The merging parties, supported by the Commission, contended that there are no negative public interest effects associated with the transaction.
05
Court’s reasoning
Legal principles
- 01
Competition Act, No. 89 of 1998
A merger may not be approved if it is likely to substantially prevent or lessen competition in any relevant market, unless justified on public interest grounds.
- 02
Competition Act, No. 89 of 1998
The assessment of public interest effects is required in all merger proceedings, including impacts on employment and the ability of small businesses to compete.
06
Ratio, limits and disposition
Ratio decidendi
The Tribunal found that the proposed transaction does not result in any horizontal overlaps, as Huawei SA does not own any Grade A office properties in South Africa. The acquisition is for Huawei SA's own operational use and not for property letting. The Commission confirmed that there are no negative public interest effects. Therefore, the transaction is unlikely to substantially prevent or lessen competition in any relevant market, and no public interest concerns arise. The Tribunal approved the transaction unconditionally.
Obiter and limits
- The Tribunal noted that the rationale for the acquisition is operational centralisation and brand establishment, not expansion into property letting.
- The merging parties and the Commission were aligned in their view that the transaction poses no public interest risks.
Court disposition
The merger is approved unconditionally.
- The proposed transaction between Huawei Technologies South Africa (Pty) Ltd and Growthpoint Properties Limited in respect of Harrowdene Office Park is approved unconditionally.
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: LM201Jan17
In the matter between
HUAWEITECHNOLOGIES SOUTH AFRICA (PTY)
LTD
Acquiring Firm
And
GROWTHPOINT
PROPERTIES LIMITED IN
RESPECT OF
HARROWDENE
OFFICE PARK Target Firm
Panel
: Ms Mondo Mazwai (Presiding Member)
: Ms Andiswa Ndoni (Tribunal Member)
: Mrs Medi Mokuena (Tribunal Member)
Heard on
: 15 February 2016
Order Issued on : 15 February 2016 Reasons Issued on : 15 February 2017
REASONS
FOR DECISION
Approval
[1] On 15 February 2017, the Competition Tribunal ('Tribunal') approved the transaction between Huawei Technologies South Africa (Pty) Ltd ('Huawei SA') and Growthpoint Properties ltd ('Growthpoint') in respect of Harrowdene Office Park ('Harrowdene').
[2] The reasons for the approval follow.
Parties to the transaction and their activities
Primary Acquiring Firm
[3] The primary acquiring firm is Huawei SA, a company incorporated in accordance with the laws of the Republic of South Africa which controls no other firm.
[4] Huawei SA is a wholly owned subsidiary of Huawei Technologies (Netherlands)
B.V ('Huawei BV'). Huawei B.V is not controlled by any firm and controls only one other firm active in South Africa, Huawei Technologies
Africa (Pty) Ltd ('Huawei Africa').
[5] Huawei SA acts as Huawei BV's regional business for the Southern African region, providing platform support, such as management
guidelines in relation to policies and operations, to other Huawei entities in the region.
[6] Huawei B.V offers telecomm operators, enterprises and consumer solutions and services in the Information and Communications technology sector. Huawei SA provides products and solutions to mobile network operators, businesses as well as consumers across the full information technology spectrum. Huawei SA does not own any property letting enterprises from which it derives income in South Africa.
Primary Target Firms
[7] The primary target property is Harrowdene, currently owned by Growthpoint. Harrowdene office park is classified as Grade A Office Space located in Woodmead in the Gauteng province.[1]
Proposed transaction and rationale
[8] In terms of the Sale of Letting Enterprise Agreement ('Sale Agreement') Huawei SA intends to acquire Harrowdene Office Park
(comprising immovable property, buildings, leases and contracts) from Growthpoint. Upon the implementation of the transaction Huawei SA will own Harrowdene Office Park together with the existing lease agreements concluded between Growthpoint and various tenants which occupy the property.
[9] Upon expiry of the leases, Huawei will use Harrowdene office park as its head office and does not intend to operate the property as a property letting enterprise from which to derive rental income.
[10] In terms of rationale, Huawei SA submits that it has outgrown its current leased properties and the target property has been identified as suitable property from which to centralise its operations and establish a local brand image reflecting its commitment to the South African market.
[11] Growthpoint submits that the proposed transaction is an attractive offer which allows for the realisation of investment in relation to the property.
Relevant market and impact on competition
[12] The Commission found that the proposed transaction does not result in any horizontal overlaps as Huawei SA does not own any Grade A office properties in the Republic of South Africa.
Public interest
[13] The merging parties submitted, which was confirmed by the Commission, that the proposed transaction will not have a negative public interest effects.[2]
Conclusion
[14] 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 issued arise from the proposed transaction. Accordingly, we approve the proposed transaction unconditionally.
15 February 2017
Date
_______
Ms Mondo Mazwai
Ms Andiswa Ndoni and Mrs Medi Mokuea
Tribunal Researcher: Alistair Dey-van Heerden
For the Merging Parties Vani Chetty of Baker McKenzie
For the Commission: Amanda Mfuphi
[1] 128 Western Service road Woodmead, Johannesburg.
[2] Page 51 of the Merger record, page 9 of the Commission's recommendations.
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.