Redefine Properties Ltd v Hyprop Investments Ltd (47/LM/Apr12) [2012] ZACT 64; [2012] 2 CPLR 458 (CT) (24 July 2012)

Redefine Properties Ltd v Hyprop Investments Ltd (47/LM/Apr12) [2012] ZACT 64; [2012] 2 CPLR 458 (CT) (24 July 2012)

The Tribunal found that while Redefine and Hyprop both operate in the rentable retail space market, there is no geographical overlap between their properties, and sufficient competition exists within a 10 kilometre radius of South Coast Mall. The only competition concern identified was the exclusivity clause in the lease agreement with the anchor tenant, Shoprite Checkers, which could restrict access for small businesses. The merging parties undertook to negotiate the removal of this clause and to report compliance to the Commission. No adverse public interest effects, including employment, were identified. The Tribunal approved the merger subject to the conditions offered by the parties...

Citation
[2012] ZACT 64
Parties
Applicant: Redefine Properties Limited; Respondent: Hyprop Investments Limited
Court
Competition Tribunal
Jurisdiction
South Africa
Judgment Date
24 July 2012
Case Number
47/LM/Apr12
Procedural Posture
Merger Application / Conditional Approval
Outcome
Merger conditionally approved subject to undertakings regarding the removal of the exclusivity clause in the anchor tenant's lease agreement.
Judges
Norman Manoim, Yasmin Carrim, Andiswa Ndoni
Legal Topics
Merger Control, Exclusivity Clauses, Retail Property Market
Competition Law Commercial and Corporate Merger Control Exclusivity Clauses Retail Property Market

Case Brief

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Parties

Redefine Properties Limited

Applicant

Hyprop Investments Limited

Respondent

Procedural Posture

Merger Application / Conditional Approval

Legal Issues

  1. 1 Whether the proposed acquisition of Hyprop's 50% share in South Coast Mall by Redefine raises competition concerns.
  2. 2 Whether the exclusivity clause in the anchor tenant's lease agreement restricts competition and access for small businesses.
  3. 3 Whether the transaction raises any public interest concerns, including employment effects.

Ratio Decidendi

The Tribunal found that while Redefine and Hyprop both operate in the rentable retail space market, there is no geographical overlap between their properties, and sufficient competition exists within a 10 kilometre radius of South Coast Mall. The only competition concern identified was the exclusivity clause in the lease agreement with the anchor tenant, Shoprite Checkers, which could restrict access for small businesses. The merging parties undertook to negotiate the removal of this clause and to report compliance to the Commission. No adverse public interest effects, including employment, were identified. The Tribunal approved the merger subject to the conditions offered by the parties...

Court Disposition

Merger conditionally approved subject to undertakings regarding the removal of the exclusivity clause in the anchor tenant's lease agreement.

Orders

  • Redefine shall negotiate with Checkers in utmost good faith to remove the exclusivity clause in the lease agreement within thirty days of the Tribunal order.
  • Redefine shall, within sixty days after entering into a new lease agreement with Checkers, provide the Commission with a detailed report on compliance with the condition regarding the exclusivity clause.