Macsteel Services Centres SA (Pty) Ltd v Samson Property Investments SA (Pty) Ltd (52/LM/May12) [2012] ZACT 50 (9 July 2012)
- Citation
- [2012] ZACT 50
- Status
- Judgment
- Jurisdiction
- South Africa
- Court
- Competition Tribunal
- Panel
- Norman Manoim, Yasmin Carrim, Andiswa Ndoni
- Case number
- 52/LM/May12
More details
- Court
- Competition Tribunal
- Panel
- Norman Manoim, Yasmin Carrim, Andiswa Ndoni
- Case number
- 52/LM/May12
On this page
Professional case brief
Research organized from the available case record
01
Holding and result
The Tribunal found that the proposed transaction involves both horizontal and vertical elements in the property market, specifically concerning rentable light industrial properties in the Germiston and Boksburg nodes. The combined post-merger market shares are low (3.79% in Germiston and 2.59% in Boksburg), and the properties have always been used exclusively by the acquiring firm. The transaction does not alter the competitive dynamics, as there are no other tenants and no foreclosure concerns. The Tribunal concluded that the merger does not raise any horizontal or vertical competition concerns and is unlikely to substantially prevent or lessen competition. No public interest issues were identified.
Court disposition
The merger is unconditionally approved.
Orders
- The proposed transaction between Macsteel Services Centres SA (Pty) Ltd and Samson Property Investments SA (Pty) Ltd is approved without conditions.
02
Material facts
Parties
Macsteel Services Centres SA (Pty) Ltd
Applicant Counsel: Webber WentzelSamson Property Investments SA (Pty) Ltd
Respondent Counsel: Webber WentzelAmounts and remedies
- Germiston Node Pre Merger Market Share (mscsa): ZAR 1.39
- Germiston Node Pre Merger Market Share (spisa): ZAR 2.4
- Germiston Node Post Merger Market Share (combined): ZAR 3.79
- Boksburg Node Pre Merger Market Share (mscsa): ZAR 1.22
- Boksburg Node Pre Merger Market Share (spisa): ZAR 1.37
- Boksburg Node Post Merger Market Share (combined): ZAR 2.59
03
Procedural history
Posture
Merger Control / Approval
04
Questions and positions
Legal issues
- 01
Whether the proposed acquisition will substantially prevent or lessen competition in the relevant property market.
- 02
Whether the transaction raises any horizontal or vertical competition concerns.
- 03
Whether there are any public interest issues arising from the merger.
Party arguments
- Applicant
- The applicant argued that the acquisition is a sound business investment, enabling it to secure property for its operations. As the sole tenant of the target firm's properties, the transaction is a logical step and does not alter the competitive landscape. The applicant contended that the merger would not affect competition, as the properties have always been used exclusively by the applicant.
- Respondent
- The respondent submitted that the sale allows it to realise its property investments and is a logical transaction given the applicant is its only tenant. The respondent maintained that the transaction does not affect third parties and does not raise any foreclosure or competition concerns, as it does not lease properties to other tenants.
05
Court’s reasoning
Legal principles
- 01
Section 12A, Competition Act 89 of 1998
A merger will only be prohibited if it is likely to substantially prevent or lessen competition in the relevant market.
- 02
Competition Tribunal Guidelines
Horizontal and vertical analyses must consider market share and foreclosure effects to determine competitive impact.
06
Ratio, limits and disposition
Ratio decidendi
The Tribunal found that the proposed transaction involves both horizontal and vertical elements in the property market, specifically concerning rentable light industrial properties in the Germiston and Boksburg nodes. The combined post-merger market shares are low (3.79% in Germiston and 2.59% in Boksburg), and the properties have always been used exclusively by the acquiring firm. The transaction does not alter the competitive dynamics, as there are no other tenants and no foreclosure concerns. The Tribunal concluded that the merger does not raise any horizontal or vertical competition concerns and is unlikely to substantially prevent or lessen competition. No public interest issues were identified.
Obiter and limits
- It is artificial to view these properties as forming part of the competitive market for light industrial property, as their use remains unchanged post-merger.
- The merger merely transfers ownership within entities controlled by the same family, without affecting third parties or market competition.
Court disposition
The merger is unconditionally approved.
- The proposed transaction between Macsteel Services Centres SA (Pty) Ltd and Samson Property Investments SA (Pty) Ltd 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: 52/LM/May12
015040
Macsteel Services Centres SA (Pty) Ltd …......................................................Acquiring Firm
And
Samson Property Investments SA (Pty) Ltd ….....................................................Target Firm
Panel : Norman Manoim (Presiding Member)
Yasmin Carrim (Tribunal Member)
Andiswa Ndoni(Tribunal Member)
Heard on : 04/07/2012
Order issued on : 04/07/2012
Reasons issued on : 09/07/2012
Reasons for Decision
APPROVAL
On 4 July 2012 the Competition Tribunal (“Tribunal”) unconditionally approved the proposed transaction between Macsteel
Services Centres SA (Pty) Ltd and Samson Property Investments SA (Pty) Ltd. The reasons for approval of the proposed transaction
follow below.
THE
TRANSACTION
This is a horizontal and vertical property transaction. The proposed transaction involves the acquisition by Macsteel Services Centres SA (Pty) Ltd (“MSCSA”) of Samson Property Investments SA (Pty) Ltd property (“SPISA”).
In term of the proposed transaction MSCSA intends to acquire 100% of the issued share capital of SPISA property assets. That way, post merger, MSCSA will have sole control over SPISA’s properties.
MSCSA currently rents out SPISA’s properties for the purposes of conducting its business activities and is the only tenant as SPISA does not rent out its properties to any other third parties.
THE
RATIONALE FOR THE TRANSACTION
MSCSA considers this transaction as a good investment for its business as it will further enhance its ability to secure property for its business operations. For SPISA this is an opportunity to realise its property investments, and it considers it a logical step to sell to its existing and only tenant.
COMPETITION
ASSESSMENT
Activities of the merging parties
MSCSA’s key business activities are in the steel market. Though property is not its main business, it does own several office and light industrial properties, some of which are leased to third parties. MSCSA also rents light industrial property from third parties for the purpose of conducting its business. MSCSA’s properties are located across the country, but the ones relevant for the purpose of this transaction, are those located within the Germiston and Boksburg nodes.
SPISA is primarily a property investor and derives its income from rentals received from tenants. It holds various properties, mainly industrial properties, in various locations including within the Germiston and Boksburg nodes. MSCSA is currently SPISA’s only tenant.
Horizontal Analysis
The activities of the merging parties overlap horizontally in respect of the provision of rentable light industrial properties in the Germiston and Boksburg nodes.
In the market for rentable light industrial property in the Germiston node, premerger MSCSA has 1.39%, and SPISA has 2.40% market share, and the merged entity will have a combined market share of 3.79% post merger.
In the market for rentable light industrial property in the Boksburg node, premerger MSCSA currently has 1.22% and SPISA has 1.37% market share. Post merger, the merged entity will have a combined market share of 2.59% in that market.
However it is artificial to view these properties as forming part of the competitive market for light industrial property. Prior to the merger the properties were used solely by MSCSA and this will continue post merger. The merger does no more than re-house the properties from one controlled entity of the Samson family to another.
Vertical Analysis
There is a vertical relationship between the merging parties’ activities in that MSCSA currently rents SPISA’s properties.
However this does not raise any foreclosure concerns as SPISA does not rent its properties to any other third parties as MSCSA is its only existing tenant.
PUBLIC
INTEREST
There are no public interest issues.
CONCLUSION
We conclude that the proposed transaction is unlikely to substantially prevent or lessen competition in the property market as it does not raise any horizontal competition concerns or any foreclosure concerns.
____ 09 July 2012
N Manoim Date
Yasmin Carrim and Andiswa Ndoni concurring
Tribunal Researcher: Londiwe Senona
For the merging parties: Webber Wentzel
For the Commission: Lerato Monareng
3
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