K2015068356 (South Africa) (Pty) Ltd v Pearl Valley Golf Estates (Pty) Ltd and Another (LM149Oct15) [2015] ZACT 72 (3 December 2015)
The Tribunal found that the proposed transaction would not result in a substantial prevention or lessening of competition in the relevant market for luxury residential estates in Paarl and surrounding areas, as the merged entity's market share would remain below 15% and sufficient competition would persist....
Source-derived case information.
- Citation
- [2015] ZACT 72
- Parties
- Applicant: K2015068356 (South Africa) (Pty) Ltd; Respondent: Pearl Valley Golf Estates (Pty) Ltd; Respondent: Seven Wood Trading 57 (Pty) Ltd
- Court
- Competition Tribunal
- Jurisdiction
- South Africa
- Case Number
- LM149Oct15
- Procedural Posture
- Merger Control / Tribunal Approval of Proposed Merger
- Outcome
- The proposed transaction is approved unconditionally.
- Judges
- Andreas Wessels, lmraan Valodia, Medi Mokuena
- Legal Topics
- Merger Control, Substantial Lessening of Competition, Public Interest, Market Share Analysis
Source-derived case record
Summary, issues, holding and outcome
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Parties
K2015068356 (South Africa) (Pty) Ltd
Applicant
Pearl Valley Golf Estates (Pty) Ltd
Respondent
Seven Wood Trading 57 (Pty) Ltd
Respondent
Procedural Posture
Merger Control / Tribunal Approval of Proposed Merger
Legal Issues
- 1 Whether the proposed transaction will substantially prevent or lessen competition in the market for luxury residential estates in Paarl and surrounding areas.
- 2 Whether the proposed transaction raises any public interest concerns, including adverse effects on employment.
Ratio Decidendi
The Tribunal found that the proposed transaction would not result in a substantial prevention or lessening of competition in the relevant market for luxury residential estates in Paarl and surrounding areas, as the merged entity's market share would remain below 15% and sufficient competition would persist. Furthermore, the transaction raised no public interest concerns, including adverse effects on employment. Accordingly, the Tribunal approved the transaction unconditionally.
Court Disposition
The proposed transaction is approved unconditionally.
Orders
- The merger between K2015068356 (South Africa) (Pty) Ltd, Pearl Valley Golf Estates (Pty) Ltd, and Seven Wood Trading 57 (Pty) Ltd is approved unconditionally.
Full Case Text
Judgment text and source record
54 paragraphs
COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: LM1490ct15
In the matter between:
K2015068356 (South Africa) (Pty) Ltd
Acquiring Firm
And
Pearl Valley Golf Estates (Pty) Ltd
Seven Wood Trading 57 (Pty) Ltd
Target Firms
Panel
: Andreas Wessels (Presiding Member)
: lmraan Valodia (Tribunal Member)
: Medi Mokuena (Tribunal Member)
Heard on
: 25 November 2015
Order Issued on
: 25 November 2015
Reasons Issued on : 03 December 2015
Reasons for Decision
Approval
[1] On 25 November 2015, the Competition Tribunal ("Tribunal") unconditionally approved the proposed transaction involving
K2015068356 (South Africa) (Pty) Ltd ("K2015068356"), the business of Pearl Valley Golf Estates (Pty) Ltd ("Pearl Valley") and the entire issued share capital of Seven Wood Trading 57 (Pty) Ltd ("Seven Wood").
[2] The reasons for approving the proposed transaction follow.
Primary acquiring firm
[3] The acquiring firm is K2015068356, a company incorporated in terms of the laws of the Republic of South Africa and established specifically for the purposes of the proposed transaction. It therefore does not currently conduct any operations. It is controlled by Val de Vie Investments Two (Pty) Ltd ("Val de Vie") and PV Consortium (Pty) Ltd ("PV Consortium"). K2015068356, Val de Vie and PV Consortium do not control any other firms.
[4] The acquiring group has a diverse investment portfolio in listed equities, property, agriculture, financial services, hospitality,
marketing management and property development. The group's luxury residential properties in the Western Cape are relevant to the
assessment of the proposed transaction.
Primary target firms
[5] The primary target firms are Pearl Valley and Seven Wood which are both companies incorporated in accordance with the laws of the Republic of South Africa. Pearl Valley is controlled by LC Golf SA (Pty) Ltd ("LC Golf"). LC Golf is controlled by the Standard Bank of South Africa Limited (acting through its Real Estate Investment Division). Pearl Valley controls Seven Wood.
[6] Pearl Valley holds and manages the Pearl Valley Golf and Country Estate, a residential golf and lifestyle community estate
situated in the Cape Winelands in the Western Cape. Seven Wood conducts an estate agency business in relation to the residential
properties on Pearl Valley.
Proposed transaction and rationale
[7] In terms of the proposed transaction, K2015068356 seeks to acquire the business of Pearl Valley and 100% of the issued share capital of Seven Wood.
[8] The acquiring group submitted that Pearl Valley is a commercially viable business which would enable it to increase returns for its investors in the market for luxury residential estates in South Africa.
[9] The Competition Commission ("Commission") assessed the competition effects of the proposed transaction in the market for luxury residential estates in Paarl and the surrounding areas including Stellenbosch and Franschoek. The merged entity will have a post-merger market share of less than 15% in this market. Based on this market share and that the merged entity will be constrained by other players post merger, the Commission found that the proposed transaction was unlikely to result in a substantial
lessening or prevention of competition in this market.
[10] We concur with the Commission that the proposed transaction is unlikely to substantially prevent or lessen competition in any
relevant market.
Public interest
[11] The merging parties confirmed that the proposed transaction will not have any adverse effect on employment. [1]
[12] The proposed transaction further raises no other public interest concerns.
Conclusion
[13] 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.
03 December 2015
Date
______________________
Andreas Wessels
lmraan Valodia and Medi Mokuena concurring
Tribunal Researcher: Ammara Cachalia
For the merging parties: Vani Chetty of Baker & McKenzie
For the Commission: Prishani Maheeph
[1] See inter alia page 9 of the merger record.