Pangbourne Property (Pty) Ltd and Rental Enterprise conducted by Paramount Property (Pty) Ltd (66/LM/Jul05) [2005] ZACT 68 (17 October 2005)
- Citation
- [2005] ZACT 68
- Status
- Judgment
- Jurisdiction
- South Africa
- Court
- Competition Tribunal
- Panel
- N. Manoim, Y. Carrim, D. Lewis
- Case number
- 66/LM/Jul05
More details
- Court
- Competition Tribunal
- Panel
- N. Manoim, Y. Carrim, D. Lewis
- Case number
- 66/LM/Jul05
On this page
Professional case brief
Research organized from the available case record
01
Holding and result
The Tribunal found that the combined post-merger market shares in the relevant geographic nodes—Kempton Park (industrial) at 6.2%, Midrand (industrial) at 9.5%, and Sandton (grade A office space) at 0.24%—are low and do not raise competition concerns. There is limited product overlap between Pangbourne and Paramount, and the transaction does not result in significant market concentration. No public interest concerns were identified that would alter the conclusion. Accordingly, the Tribunal approved the merger unconditionally, finding that it would not substantially lessen or prevent competition.
Court disposition
Merger approved unconditionally.
Orders
- The merger between Pangbourne Property (Pty) Ltd and the Rental Enterprise conducted by Paramount Property Fund Limited is approved without conditions.
02
Material facts
Parties
Pangbourne Property (Pty) Ltd
Applicant Counsel: Edward Nathan Corporate Law AdvisorsParamount Property Fund Limited
RespondentAmounts and remedies
- Kempton Park (industrial) Post Merger Market Share: 6.2
- Midrand (industrial) Post Merger Market Share: 9.5
- Sandton (office Grade A) Post Merger Market Share: 0.24
03
Procedural history
Posture
Large Merger Review / Merger Clearance
04
Questions and positions
Legal issues
- 01
Whether the proposed merger will substantially lessen or prevent competition in the relevant markets.
- 02
Whether there are any public interest concerns that would warrant prohibition or conditions.
Party arguments
- Applicant
- Pangbourne Property (Pty) Ltd argued that the acquisition of the 15 properties and associated rental enterprise from Paramount Property Fund Limited is part of its strategy to achieve consistent growth in returns for its unit-holders. The applicant submitted that the transaction would not result in significant market concentration, as the combined market shares in the relevant geographic nodes are low. Pangbourne further contended that there are no public interest concerns arising from the transaction.
- Respondent
- Paramount Property Fund Limited supported the transaction, stating that it is disposing of its smaller properties spread over a wide geographic area to streamline its portfolio. The respondent agreed that the overlap in product markets is limited to grade A office space and light industrial space in Sandton, Kempton Park, and Midrand, and that the merger would not negatively affect competition or public interest.
05
Court’s reasoning
Legal principles
- 01
Competition Act, 89 of 1998, section 16(2)(a)
A merger may only be prohibited if it is likely to substantially prevent or lessen competition, unless public interest concerns justify prohibition.
- 02
South African Property Owners’ Association and Independent Property Databank industry data
Market share analysis is a key factor in assessing the competitive effects of a merger.
06
Ratio, limits and disposition
Ratio decidendi
The Tribunal found that the combined post-merger market shares in the relevant geographic nodes—Kempton Park (industrial) at 6.2%, Midrand (industrial) at 9.5%, and Sandton (grade A office space) at 0.24%—are low and do not raise competition concerns. There is limited product overlap between Pangbourne and Paramount, and the transaction does not result in significant market concentration. No public interest concerns were identified that would alter the conclusion. Accordingly, the Tribunal approved the merger unconditionally, finding that it would not substantially lessen or prevent competition.
Obiter and limits
- The Tribunal noted that the disposal of smaller properties by Paramount is consistent with rational portfolio management strategies.
- The Tribunal observed that the use of industry data from the South African Property Owners’ Association and Independent Property Databank provided a reliable basis for market share analysis.
Court disposition
Merger approved unconditionally.
- The merger between Pangbourne Property (Pty) Ltd and the Rental Enterprise conducted by Paramount Property Fund 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
REPUBLIC
OF SOUTH AFRICA
Case No: 66/LM/Jul05
In the large merger between:
Pangbourne Property (Pty) Ltd
and
The Rental Enterprise conducted by Paramount Property (Pty) Ltd
Reasons for Decision
________________
APPROVAL
On 29 September 2005 the Competition Tribunal issued a Merger Clearance Certificate approving the merger between Pangbourne Property (Pty) Ltd and the Rental Enterprise conducted by Paramount Property (Pty) Ltd in terms of section 16(2)(a). The reasons for the approval of the merger appear below.
The Parties
The acquiring firm is Pangbourne Property (Pty) Ltd. (âPangbourneâ), a company listed under the financial real estate sector of the JSE. It is not controlled by any firm but itself controls a number of subsidiaries, none of which are relevant for the purpose of this analysis. It also has a 48% interest in iFour Properties Limited. 1 iFour is described as an âassociate companyâ of Pangbourne, and is an investment company also listed on the JSE and also owning properties.
The primary target firm is the rental enterprise (âEnterpriseâ), which is conducted by Paramount Property Fund Limited, also listed on the JSE as a property loan firm. The property portfolio being acquired is registered in the name of Paramount and comprises some 15 industrial and commercial properties listed in the agreement of sale, as well as the business enterprise of letting the property including all fixtures and fittings.
The Merger Transaction
Pangbourne is acquiring 15 properties currently registered in the name of Paramount together with the business enterprise comprising letting of the property and all fixtures and fittings.
Rationale for the Transaction
Paramount is disposing of its smaller properties spread over a wide geographic area. Pangbourne seeks to acquire these properties to aid its strategy of achieving consistent growth in returns for its group unit-holders.
The relevant product and geographic markets
Pangbourne invests in a range of properties in order to achieve returns on behalf of its investors and manage risk.
Paramount has a property portfolio comprising various types of rentable space including retail space, office space, industrial space, parking space and other rentable space throughout the country.
The product overlap between the activities of Paramount and Pangbourne is in respect of grade A office space and light industrial space in the geographic areas or nodes of Sandton, Kempton Park and Midrand.
Effect on Competition
The combined post-merger market shares in each geographic node are low, being as follows2:
Kempton Park (industrial) 6.2%
Midrand (industrial) 9.5%
Sandton (office grade A) 0.24%
Conclusion
We conclude that the merger will not lead to a substantial lessening or prevention of competition.
The Tribunal therefore approves the transaction unconditionally. There are no public interest concerns which would alter this conclusion.
__
17 October 2005
N. Manoim Date
Concurring: Y. Carrim, D. Lewis
For the merging parties: Edward Nathan Corporate Law Advisors
For the Commission: O. Strydom, Mergers and Acquisitions
1 iFourâs subsidiaries include Sipan 1 (Pty) Ltd, iFour Properties S.A. (Pty) Ltd, iFour Properties Three (Pty) Ltd, iIFour Properties Two (Pty) Ltd.
2 Based on industry data supplied by the South African Property Ownersâ Association and Independent Property Databank.
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