Hyprop investments Ltd v Sycom Property Fund Managers Ltd (016683) [2013] ZACT 86; [2013] 2 CPLR 530 (CT) (7 August 2013)

Hyprop investments Ltd v Sycom Property Fund Managers Ltd (016683) [2013] ZACT 86; [2013] 2 CPLR 530 (CT) (7 August 2013)

The Tribunal found that the proposed merger does not substantially prevent or lessen competition in any relevant market, as Hyprop's other properties in the Western Cape are either too distant or not close competitors to Somerset Mall. However, the exclusivity clause in the Pick 'n Pay lease agreement at Somerset Mall raises a substantial public interest concern by potentially excluding small businesses from accessing retail space. The Commission's investigation revealed practical possibilities for small business entry, but the lack of consultation with small businesses and differences between Somerset Mall and alternative centres justified a conditional approval. The Tribunal approved...

Citation
[2013] ZACT 86
Parties
Applicant: Hyprop Investments Limited; Respondent: Sycom Property Fund Managers Limited; Respondent: Somerset Mall Property Management Company (Pty) Ltd
Court
Competition Tribunal
Jurisdiction
South Africa
Judgment Date
7 August 2013
Case Number
016683
Procedural Posture
Large Merger Application / Conditional Approval
Outcome
Merger conditionally approved subject to undertakings regarding the removal of the exclusivity clause in the Pick 'n Pay lease agreement.
Judges
Andreas Wessels, Mondo Mazwai, Anton Roskam
Legal Topics
Merger Control, Public Interest Conditions, Exclusivity Clauses, Retail Property Merger, Small Business Access
Competition Law Commercial and Corporate Land and Property Merger Control Public Interest Conditions Exclusivity Clauses Retail Property Merger Small Business Access

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Parties

Hyprop Investments Limited

Applicant

Sycom Property Fund Managers Limited

Respondent

Somerset Mall Property Management Company (Pty) Ltd

Respondent

Procedural Posture

Large Merger Application / Conditional Approval

Legal Issues

  1. 1 Does the proposed merger substantially prevent or lessen competition in any relevant market?
  2. 2 Does the exclusivity clause in the Pick 'n Pay lease agreement raise a substantial public interest concern regarding small business access?
  3. 3 Should the merger be approved subject to conditions addressing public interest concerns?

Ratio Decidendi

The Tribunal found that the proposed merger does not substantially prevent or lessen competition in any relevant market, as Hyprop's other properties in the Western Cape are either too distant or not close competitors to Somerset Mall. However, the exclusivity clause in the Pick 'n Pay lease agreement at Somerset Mall raises a substantial public interest concern by potentially excluding small businesses from accessing retail space. The Commission's investigation revealed practical possibilities for small business entry, but the lack of consultation with small businesses and differences between Somerset Mall and alternative centres justified a conditional approval. The Tribunal approved...

Court Disposition

Merger conditionally approved subject to undertakings regarding the removal of the exclusivity clause in the Pick 'n Pay lease agreement.

Orders

  • Hyprop and Sycom must jointly use reasonable commercial endeavours to negotiate with Pick 'n Pay, in utmost good faith within sixty (60) days of the Tribunal's order, to remove the exclusivity clause in the lease agreement.
  • Hyprop or Sycom must provide the Commission with an affidavit setting out the outcome of the negotiations with Pick 'n Pay within ninety (90) days of the Tribunal's order.