Nedbank Limited v Emling Properties Proprietary Limited (LM163Dec22) [2023] ZACT 10 (30 March 2023)
- Citation
- [2023] ZACT 10
- Status
- Judgment
- Jurisdiction
- South Africa
- Court
- Competition Tribunal
- Panel
- A Wessels, T Vilakazi, A Ndoni
- Case number
- LM163Dec22
More details
- Court
- Competition Tribunal
- Panel
- A Wessels, T Vilakazi, A Ndoni
- Case number
- LM163Dec22
On this page
Professional case brief
Research organized from the available case record
01
Holding and result
The Tribunal found that the proposed transaction would not result in a substantial prevention or lessening of competition in any relevant market, as the combined market shares of the merging parties were low and there were sufficient competitors in the affected geographic areas. The Tribunal also determined that there would be no negative impact on employment, as Emling Properties would remain independent and not be integrated into Nedbank, thus avoiding duplications and retrenchments. Furthermore, the transaction would result in an increase in black economic empowerment shareholding in Emling Properties, addressing public interest considerations. No other public interest concerns were identified. Accordingly, the merger was approved unconditionally.
Court disposition
Merger approved unconditionally.
Orders
- The proposed merger between Nedbank Limited and Emling Properties Proprietary Limited is approved without conditions.
02
Material facts
Parties
Nedbank Limited, Acting Through its Nedbank Corporate And Investment Banking Division, Nedbank Property Partners
Applicant Counsel: Vani ChettyEmling Properties Proprietary Limited
RespondentCompetition Commission
Respondent Counsel: Nolubabalo Myoli and Grashum MutizwaAmounts and remedies
- Combined Market Share (gla) in Relevant Areas: 15
- Nedbank Group Black Ownership Percentage: 40.07
- Nedbank Group Black Female Ownership Percentage: 17.75
- Post Merger BEE Shareholding in Emling Properties: 12
03
Procedural history
Posture
Large Merger Review / Merger Approval
04
Questions and positions
Legal issues
- 01
Whether the proposed merger will substantially prevent or lessen competition in any relevant market.
- 02
Whether the transaction raises any public interest concerns, including employment and black economic empowerment.
Party arguments
- Applicant
- Nedbank argued that the transaction would not negatively affect competition due to low combined market shares in the relevant geographic areas and the presence of other competitors. They further submitted that there would be no adverse impact on employment and that the transaction would increase black economic empowerment shareholding in Emling Properties.
- Respondent
- The Competition Commission concurred that the merging parties' combined market shares were below 15% in the relevant areas and that sufficient competition would remain post-merger. The Commission also found no negative employment effects and noted the increase in black economic empowerment shareholding. No concerns were raised by employee representatives.
05
Court’s reasoning
Legal principles
- 01
Competition Act, 89 of 1998
A merger may only be prohibited if it is likely to substantially prevent or lessen competition in any relevant market.
- 02
Competition Act, 89 of 1998
Public interest factors, including employment and the spread of ownership, must be considered in merger assessments.
06
Ratio, limits and disposition
Ratio decidendi
The Tribunal found that the proposed transaction would not result in a substantial prevention or lessening of competition in any relevant market, as the combined market shares of the merging parties were low and there were sufficient competitors in the affected geographic areas. The Tribunal also determined that there would be no negative impact on employment, as Emling Properties would remain independent and not be integrated into Nedbank, thus avoiding duplications and retrenchments. Furthermore, the transaction would result in an increase in black economic empowerment shareholding in Emling Properties, addressing public interest considerations. No other public interest concerns were identified. Accordingly, the merger was approved unconditionally.
Obiter and limits
- The Tribunal noted that the calculation of black economic empowerment shareholding post-merger would be 12%, based on Nedbank's 40.07% black ownership and its 30% stake in Emling Properties.
- The Tribunal acknowledged that the employee representatives for both Nedbank and Emling Properties did not raise any concerns regarding the transaction.
Court disposition
Merger approved unconditionally.
- The proposed merger between Nedbank Limited and Emling Properties Proprietary Limited 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: LM163Dec22
In the large merger between:
Nedbank Limited, Acting Through its Nedbank Corporate And Investment Banking Division, Nedbank Property Partners Primary Acquiring Firm
And
Emling Properties Proprietary Limited Primary Target Firm
Panel: A Wessels (Presiding Member)
T Vilakazi (Tribunal Member)
A Ndoni (Tribunal Member)
Heard on: 13
March 2023
Order issued on: 13
March 2023
Reasons Issued on: 30
March 2023
REASONS FOR DECISION
Introduction
[1] On 13 March 2023, the Competition Tribunal (“the Tribunal”) unconditionally approved the merger whereby Nedbank Limited (“Nedbank”) intends to subscribe for 30% of the shares and acquire 30% of the claims in Emling Properties Proprietary Limited (“Emling Properties”) from Capstone Assets Proprietary Limited (“Capstone Assets”) and Mr Hylton David Herring (“Mr Herring”).
[2] Upon the implementation of the proposed transaction, Emling Properties will be jointly controlled by Nedbank, Capstone Assets and Mr Herring.
Primary acquiring firm
[3] The principal services offered by Nedbank comprises business, corporate and retail banking, securities trading, investment banking, private banking, foreign exchange, wealth management and property financing.
[4] Relevant to the competition assessment is that Nedbank holds properties through its Nedbank Group Properties Division, Nedbank Property Finance (“NPP”) and more broadly across the group where properties have been acquired through the perfection of security (properties in possession). The activities of Nedbank which are most relevant are those of NPP through which, from time to time (as an aside to Nedbank’s main business focus), it partners with Nedbank’s property clients (which clients invest in property development projects). As such, NPP’s activities sometimes include taking minority stakes in individual property projects.
Primary target firm
[5] Emling Properties is a South African property investment firm, currently owned 50% each by Capstone Assets and Mr Herring. Emling Properties has three property subsidiaries. Emling Properties and all of the firms it controls shall collectively be referred to as “Emling Property Group.” Emling Property Group holds retail property in the Gauteng province.
Competition assessment
[6] The Competition Commission (“the Commission”) considered the activities of the merging parties and found that they overlap in relation to the provision of rentable retail property in Gauteng.
[7] From a relevant product and geographic market perspective, the Commission assessed the effects of the proposed transaction in a 5 – 10 km radius from the following convenience centres owned by Emling Properties: (i) Shoprite Boksburg; (ii) Voltex Ferndale; (iii) Voltex Pretoria; and (iv) Voltex Villieria. In these respective markets, the Commission found that the merging parties have combined market shares of below 15%, based on the Gross Lettable Areas (“GLAs”) of the properties in the respective areas.
[8] In addition, the retail properties of the merging parties will continue to be constrained by a number of other convenience centres in each of the geographic markets.
[9] We conclude that the proposed transaction is unlikely to lead to any substantial prevention or lessening of competition in any relevant market due to the low market shares and the existence of other competitors in the relevant markets.
Public interest
Employment
[10] The merging parties submitted that there will be no negative effect on employment as a result of the proposed transaction.[1] The employee representatives for Nedbank and Emling Properties did not raise any concerns with the proposed transaction.
[11] The Commission found that Emling Properties will continue to be an independent entity and will not be integrated into Nedbank, as such, the proposed transaction is unlikely to lead to duplications and subsequent retrenchments.
Spread of ownership
[12] The Nedbank Group has 40.07% black ownership which includes 17.75% black female ownership whereas pre-merger Emling Properties is not owned or controlled by any historically disadvantaged persons. The merging parties submit that post-merger, Nedbank will hold 30% of the shares in Emling Properties and as such the overall Black Economic Empowerment shareholding in Emling Properties will be 12%.[2]
[13] The proposed transaction raises no other public interest concerns.
Conclusion
[14] We conclude that the proposed transaction is unlikely to substantially prevent or lessen competition in any relevant market. Furthermore, the proposed transaction does not raise any public interest concerns.
Date: 30 March 2023
Mr Andreas Wessels
Ms Andiswa Ndoni and Dr Thando Vilakazi concurring
Tribunal Case Managers: Juliana Munyembate and Theodora Michaletos
For the Merging Parties: Vani Chetty of Vani Chetty Attorneys
For the Commission: Nolubabalo Myoli and Grashum Mutizwa
[1] See Merger record inter alia pages 8-9.
[2] (40.07% x 30%).
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