Municipal Employees Pension Fund v ERF Bryanston (Pty) Ltd (LM098Oct21) [2021] ZACT 109 (15 December 2021)
- Citation
- [2021] ZACT 109
- Status
- Judgment
- Jurisdiction
- South Africa
- Court
- Competition Tribunal
- Panel
- Andreas Wessels, Mondo Mazwai, Yasmin Carrim
- Case number
- LM098Oct21
More details
- Court
- Competition Tribunal
- Panel
- Andreas Wessels, Mondo Mazwai, Yasmin Carrim
- Case number
- LM098Oct21
On this page
Professional case brief
Research organized from the available case record
01
Holding and result
The Tribunal found that although there is a horizontal product overlap in the provision of rentable retail space, there is no geographic overlap between the merging parties' properties, as the closest property owned by the applicant is more than 45 km away from the target property. Consequently, the transaction is unlikely to substantially prevent or lessen competition in any relevant market. Furthermore, the Tribunal accepted the parties' submissions that all employees of the target firm would be re-employed, and that the transaction would facilitate beneficial ownership for members of the applicant fund, the majority of whom are from historically disadvantaged backgrounds. No other public interest concerns were identified. The merger was therefore approved unconditionally.
Court disposition
Merger approved unconditionally.
Orders
- The large merger between Municipal Employees Pension Fund and ERF Bryanston (Pty) Ltd is approved without conditions.
- All employees of ERF Bryanston (Pty) Ltd are to be re-employed by the acquiring firm.
02
Material facts
Parties
Municipal Employees Pension Fund
Applicant Counsel: Ipeleng MompatiERF Bryanston (Pty) Ltd
RespondentAmounts and remedies
- Number of Employees Affected: 8
- Gross Rentable Area of Nicol Way Shopping Centre (m2): 23,304
- Gross Rentable Area of Nicol Way East 1 (m2): 3,654
- Gross Rentable Area of Nicol Way West (m2): 4,001
- Total Members of MEPF: 26,283
03
Procedural history
Posture
Merger Control / Merger Approval
04
Questions and positions
Legal issues
- 01
Whether the proposed merger would substantially prevent or lessen competition in any relevant market.
- 02
Whether the transaction raises any public interest concerns, including effects on employment and ownership by historically disadvantaged persons.
Party arguments
- Applicant
- The Municipal Employees Pension Fund argued that the acquisition of the Nicol Way Shopping Centre and associated assets from ERF Bryanston (Pty) Ltd would not negatively impact competition, as there is no geographic overlap between its existing properties and the target property. The applicant also submitted that all employees of the target firm would be re-employed, and that the transaction would facilitate beneficial ownership for its predominantly historically disadvantaged members.
- Respondent
- ERF Bryanston (Pty) Ltd concurred with the applicant's submissions, confirming that the transaction would not result in any loss of employment and that the transfer of ownership would not affect competition in the relevant market. The respondent did not raise any additional 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 include the effect of the transaction on employment and the promotion of ownership by historically disadvantaged persons.
06
Ratio, limits and disposition
Ratio decidendi
The Tribunal found that although there is a horizontal product overlap in the provision of rentable retail space, there is no geographic overlap between the merging parties' properties, as the closest property owned by the applicant is more than 45 km away from the target property. Consequently, the transaction is unlikely to substantially prevent or lessen competition in any relevant market. Furthermore, the Tribunal accepted the parties' submissions that all employees of the target firm would be re-employed, and that the transaction would facilitate beneficial ownership for members of the applicant fund, the majority of whom are from historically disadvantaged backgrounds. No other public interest concerns were identified. The merger was therefore approved unconditionally.
Obiter and limits
- The Tribunal notes the importance of facilitating beneficial ownership for historically disadvantaged persons in merger transactions.
- The re-employment of all affected employees is a positive outcome and aligns with public interest objectives under the Competition Act.
Court disposition
Merger approved unconditionally.
- The large merger between Municipal Employees Pension Fund and ERF Bryanston (Pty) Ltd is approved without conditions.
- All employees of ERF Bryanston (Pty) Ltd are to be re-employed by the acquiring firm.
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
SAFLII Note: Certain personal/private details of parties or witnesses have been redacted from this document in compliance with the law and SAFLII Policy
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case no: LM098Oct21
Municipal Employees Pension Fund (Primary Acquiring Firm)
and
ERF [....] Bryanston (Pty) Ltd
(Primary Target Firm)
REASONS
FOR DECISION
[1] On 13 December 2021, the Competition Tribunal (“Tribunal”) unconditionally approved a large merger between the Municipal Employees Pension Fund (“MEPF”) and ERF [....] Bryanston (Pty) Ltd (“ERF [....] ”), in respect of the letting enterprise known as Nicol Way Shopping Centre (“the Target Property”).
[2] Pre-merger, Reabay Investments (Pty) Ltd (“Reabay”) effectively owns 100% of ERF [....] .
[3] The Target Property is a community centre as defined by the South African Property Association and is located in William Nicol Drive and Wedgewood Link, Bryanston, Gauteng. The Target Property comprises of the following:
a. Nicol Way Shopping Centre with a gross rentable area of 23 304 m2.
b. Nicol Way East 1, with a gross rentable area of 3 654 m2.
c. Nicol Way West, an office block development with rentable area of 4 001 m2.
[4] The proposed transaction involves the acquisition of the Target Property by the MEPF,
including the property as well as the rights in and to the leases and all other assets necessary for carrying out the enterprise from ERF [....] .
Competition assessment
[5] The Competition Commission (“Commission”) identified a horizontal product overlap in the activities of the merging parties in the provision of rentable retail space. The Commission however found that the closest retail property of the MEPF is located more than 45 km away from the Target Property and therefore concluded that there is no geographic overlap in the activities of the merging parties.
[6] Given the above, the Commission found that the proposed transaction is unlikely to substantially prevent or lessen competition in any relevant market. We concur with this finding.
Public interest
[7] ERF [....] has 8 employees. The merging parties submitted that the MEPF has resolved to re-employ the 8 employees employed by ERF [....] . Therefore, the proposed transaction will have no negative effect on employment.
[8] The MEPF has a total of 26 283 members. Of the total members, more than 95% of the active members are from historically disadvantage backgrounds. In concluding the acquisition of ERF [....] , the transaction will facilitate beneficial ownership of economic profits that will accrue to the members of the fund.
[9] The proposed transaction raises no other public interest concerns.
Conclusion
[10] We conclude that the proposed transaction is unlikely to substantially prevent or lessen competition in any relevant market.
Furthermore, the proposed transaction raises no public interest concerns.
Date: 15 December 2021
Mr Andreas Wessels
Ms Mondo Mazwai and Ms Yasmin Carrim concurring
Tribunal Case Manager: Kameel Panchm
For the Merging Parties: Ipeleng Mompati
For the Commission: Portia Bele and Grashum Mutizwa
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