Redefine Properties Limited v Respublica Student Living (Pty) Ltd (LM087Jul15) [2015] ZACT 116 (7 September 2015)
- Citation
- [2015] ZACT 116
- Status
- Judgment
- Jurisdiction
- South Africa
- Court
- Competition Tribunal
- Panel
- Y Carrim, M Mokuena, I Valodia
- Case number
- LM087Jul15
More details
- Court
- Competition Tribunal
- Panel
- Y Carrim, M Mokuena, I Valodia
- Case number
- LM087Jul15
On this page
Professional case brief
Research organized from the available case record
01
Holding and result
The Tribunal found that there was no horizontal overlap between the activities of Redefine Properties Limited and Respublica Student Living (Pty) Ltd, as Redefine did not own any student accommodation. The only vertical relationship identified was RSL's rental of office space from Redefine, which existed prior to the merger and would remain unchanged. The Tribunal agreed with the Commission's assessment that this vertical relationship was unlikely to result in foreclosure concerns. Furthermore, the merger would not result in any job losses or retrenchments, and thus did not raise any public interest concerns. On this basis, the Tribunal concluded that the proposed transaction was unlikely to substantially prevent or lessen competition in the relevant market and approved the merger unconditionally.
Court disposition
Merger approved unconditionally.
Orders
- The acquisition by Redefine Properties Limited of 51% of the issued share capital of Respublica Student Living (Pty) Ltd from Bridgehead Real Estate Fund (Pty) Ltd is approved unconditionally.
02
Material facts
Parties
Redefine Properties Limited
Applicant Counsel: Vani Chetty and Lerisha NaiduRespublica Student Living (Pty) Ltd
RespondentBridgehead Real Estate Fund (Pty) Ltd
RespondentAmounts and remedies
- Percentage of Share Capital Acquired: 51
03
Procedural history
Posture
Merger Control / Approval
04
Questions and positions
Legal issues
- 01
Whether the proposed acquisition of 51% of RSL by Redefine Properties Limited will substantially prevent or lessen competition in the relevant market.
- 02
Whether the transaction raises any public interest concerns, including job losses or retrenchments.
Party arguments
- Applicant
- Redefine Properties Limited argued that the acquisition would allow it to enter the student housing market and provide Bridgehead with access to third party capital, facilitating growth in student accommodation. The parties submitted that there was no horizontal overlap in their activities and that the vertical relationship, consisting of RSL renting office space from Redefine, would remain unchanged post-merger. They contended that the transaction would not result in any job losses or retrenchments.
- Respondent
- The Competition Commission argued that the transaction would not result in any substantial prevention or lessening of competition in the relevant market. It found no horizontal overlap between the parties and determined that the existing vertical relationship was unlikely to result in foreclosure concerns. The Commission also concluded that there were no public interest concerns, as all employees would remain employed by Respublica.
05
Court’s reasoning
Legal principles
- 01
Section 12A(1)(a) of the Competition Act, No. 89 of 1998
A merger may only be prohibited if it is likely to substantially prevent or lessen competition in the relevant market.
- 02
Section 12A(3) of the Competition Act, No. 89 of 1998
Public interest considerations must be assessed, including the effect on employment.
06
Ratio, limits and disposition
Ratio decidendi
The Tribunal found that there was no horizontal overlap between the activities of Redefine Properties Limited and Respublica Student Living (Pty) Ltd, as Redefine did not own any student accommodation. The only vertical relationship identified was RSL's rental of office space from Redefine, which existed prior to the merger and would remain unchanged. The Tribunal agreed with the Commission's assessment that this vertical relationship was unlikely to result in foreclosure concerns. Furthermore, the merger would not result in any job losses or retrenchments, and thus did not raise any public interest concerns. On this basis, the Tribunal concluded that the proposed transaction was unlikely to substantially prevent or lessen competition in the relevant market and approved the merger unconditionally.
Obiter and limits
- The Tribunal noted that the entry of Redefine into the student housing market may increase investment and competition in the sector.
- The Tribunal observed that the transaction would provide Bridgehead with access to third party capital, potentially facilitating further growth in student accommodation.
Court disposition
Merger approved unconditionally.
- The acquisition by Redefine Properties Limited of 51% of the issued share capital of Respublica Student Living (Pty) Ltd from Bridgehead Real Estate Fund (Pty) Ltd is approved unconditionally.
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: LM087Jul15
In the matter between:
REDEFINE
PROPERTIES
LIMITED
Primary Acquiring Firm
And
RESPUBLICA STUDENT LIVING (PTY)
LTD
Primary Target Firm
Panel
: Y Carrim (Presiding Member)
: M Mokuena (Tribunal Member)
: lmraan Valodia (Tribunal Member)
Heard on
: 12 August 2015
Order Issued on
: 12 August 2015
Reasons Issued on : 7 September 2015
Reasons for Decision
Approval
[1] On 12 August 2015, The Competition Tribunal ('Tribunal") unconditionally approved the acquisition by Redefine Properties Limited ("Redefine") of 51% of the issued share capital of Respublica Student Living (Pty) Ltd ("RSL") from Bridgehead Real Estate Fund (Pty) Ltd ("Bridgehead").
[2] The reasons for approving the proposed transaction follow.
Parties to the transaction
Acquiring firm
[3] The primary acquiring firm is Redefine. Redefine is not controlled by any one firm and its shareholders with more than 5% include: Government Employees Pension Fund, Redefine Empowerment Trust Limited, State Street (Custodian) Corporation, and Stanlib Limited. Redefine controls various companies. Redefine and its subsidiaries will be referred to as the "Redefine
Group".
[4] Redefine is a property holding company, its portfolio comprises of office, retail and industrial properties located throughout South Africa.
Target firm
[5] The target property is Respublica Student Living (Pty) Ltd ("RSL"), a company wholly owned and controlled by Bridgehead. Bridgehead is not controlled by any one firm and its shareholders with more than 5% include: Bridgehead Investment (Pty) Ltd, Cledon Trading (Pty) Ltd and Hanend Properties (Pty) Ltd. Bridgehead controls the following subsidiaries:
• Respublica Capital (Pty) Ltd,
• Respublica (Pty) Ltd,
• Respublica Developments (Pty) Ltd,
• Bridgehead Real Estate Fund Trust, and
• Bridgehead Real Estate Fund Trust 2. RSL does not control any firm.
[6] RSL owns, manages and develops rentable residential property mainly for student accommodation in Johannesburg and Pretoria.
Proposed Transaction and Rationale
[7] Redefine intends to acquire 51% of the issued share capital of RSL from Bridgehead. Post - merger Redefine and Bridgehead will jointly control RSL, as Bridgehead will remain with a 49% shareholding.
[8] Redefine wants to enter the student housing market. Bridgehead will have access to third party capital and will grow its portfolio of student accommodation.
Relevant Market and Impact on Competition
[9] The Commission considered the activities of the merging parties to determine the relevant market for provision of residential
accommodation for students. It found that there is no horizontal overlap between the activities of the merging parties as the Redefine
Group does not own any student accommodation. The Commission found that there is a vertical overlap between the merging parties as RSL currently rents an office space property situated in Sandton from Redefine. The Commission found that the vertical relationship is unlikely to result in any foreclosure concerns as this relationship existed pre-merger and the status quo will remain the same post merger.
[10] The Commission accordingly concluded that the proposed transaction is unlikely to substantially prevent or lessen competition in the relevant markets. We agree with this assessment.
Public Interest
[11] The merger will not result in any job losses or retrenchments because all employees will remain employed by Respublica. Therefore the transaction does not raise any public interest concerns.
Conclusion
[12] In light of the above we concluded that the proposed transaction was unlikely to substantially prevent or lessen competition. Accordingly we approved the proposed transaction unconditionally.
7 September 2015
DATE
______
Ms Y Carrim
Ms M Mokuena and Prof I Valodia concurring
Tribunal Researcher:
Moleboheng Moleko
For the merging parties: Vani Chetty and Lerisha Naidu - Baker & McKenzie
For the Commission:
Billy Mabatamela, Seema Nunkoo and Xolela Nokele
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