Redefine Retail Proprietary Limited v Pan Africa Development Limited and Another (LM154Dec23) [2024] ZACT 42 (20 March 2024)
- Citation
- [2024] ZACT 42
- Status
- Judgment
- Jurisdiction
- South Africa
- Court
- Competition Tribunal
- Panel
- A Kessery, T Vilakazi, L Mncube
- Case number
- LM154Dec23
More details
- Court
- Competition Tribunal
- Panel
- A Kessery, T Vilakazi, L Mncube
- Case number
- LM154Dec23
On this page
Professional case brief
Research organized from the available case record
01
Holding and result
The Tribunal found that the proposed merger would result in Redefine acquiring sole control over Pan Africa and Pan Africa Phase 2, with a moderate increase in market share to 20% and a market share accretion of 3%. The merged entity would continue to face competition from several other comparative retail centres within a 15km radius. The transaction would not result in any employment losses, as affected employees would be transferred on the same terms. The merger would also increase the ownership of historically disadvantaged persons in both Pan Africa and Pan Africa Phase 2. No third parties raised concerns. The Tribunal concluded that the merger is unlikely to substantially prevent or lessen competition or raise public interest concerns and approved the transaction unconditionally.
Court disposition
Merger approved unconditionally.
Orders
- The proposed transaction is approved without conditions.
02
Material facts
Parties
Redefine Retail Proprietary Limited
Applicant Counsel: Vani Chetty Competition Law (Pty) LtdPan Africa Development Proprietary Limited
RespondentPan Africa Phase 2 Proprietary Limited
RespondentAmounts and remedies
- Pan Africa Shopping Centre Gross Lettable Area (gla): ZAR 15,767
- Pan Africa Phase 2 Retail Space to Be Developed: ZAR 3,800
- Merged Entity Market Share (gla): ZAR 20
- Market Share Accretion (gla): ZAR 3
- Pre Merger Pan Africa HDP Ownership (%): ZAR 11.495
- Pre Merger Pan Africa Phase 2 HDP Ownership (%): ZAR 22.59
- Redefine HDP Ownership (%): ZAR 42.4
- Post Merger Pan Africa HDP Ownership (%): ZAR 21.57
- Post Merger Pan Africa Phase 2 HDP Ownership (%): ZAR 42.4
03
Procedural history
Posture
Large Merger Review / Reasons for Decision
04
Questions and positions
Legal issues
- 01
Whether the proposed merger will substantially prevent or lessen competition in the relevant market.
- 02
Whether the transaction raises any public interest concerns, including employment and historically disadvantaged persons ownership.
- 03
Whether the merger results in significant market share accretion or anti-competitive effects.
Party arguments
- Applicant
- Redefine submitted that the acquisition would not result in any substantial prevention or lessening of competition in the market for rentable retail space. The transaction would not negatively impact employment, as affected employees would be transferred on identical terms. Redefine also argued that the merger would increase the ownership of historically disadvantaged persons in both Pan Africa and Pan Africa Phase 2, thereby advancing public interest objectives.
- Respondent
- The Commission found that the transaction gives rise to a horizontal overlap in the market for rentable retail space, specifically comparative centres, but concluded that the merged entity's market share would remain moderate and competition from other centres would persist. The Commission also confirmed that no employment concerns would arise and that the transaction would increase HDP ownership. No third parties raised objections.
05
Court’s reasoning
Legal principles
- 01
Competition Act No. 89 of 1998, section 12A
A merger may only be prohibited if it is likely to substantially prevent or lessen competition in any relevant market.
- 02
Competition Act No. 89 of 1998, section 12A(3)
Public interest factors, including employment and ownership by historically disadvantaged persons, must be considered in merger assessments.
- 03
Primegrowth Retail Property (Pty) Ltd and Hyprop Investment Proprietary Limited Case No: LM209Mar21
The relevant geographic market for comparative retail centres is a 15km radius surrounding the target centre.
06
Ratio, limits and disposition
Ratio decidendi
The Tribunal found that the proposed merger would result in Redefine acquiring sole control over Pan Africa and Pan Africa Phase 2, with a moderate increase in market share to 20% and a market share accretion of 3%. The merged entity would continue to face competition from several other comparative retail centres within a 15km radius. The transaction would not result in any employment losses, as affected employees would be transferred on the same terms. The merger would also increase the ownership of historically disadvantaged persons in both Pan Africa and Pan Africa Phase 2. No third parties raised concerns. The Tribunal concluded that the merger is unlikely to substantially prevent or lessen competition or raise public interest concerns and approved the transaction unconditionally.
Obiter and limits
- The Tribunal noted that the market for rentable retail space can be divided into convenience centres, comparative centres, lifestyle centres, and value centres, but did not make a definitive finding on the product market in this case.
- The increase in HDP ownership post-merger was viewed positively as advancing transformation objectives in the property sector.
- The absence of third-party objections was considered indicative of the transaction's limited impact on competition and public interest.
Court disposition
Merger approved unconditionally.
- The proposed transaction 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: LM154Dec23
In the large merger between: Redefine Retail Proprietary Limited Primary Acquiring Firm And Pan Africa Development Proprietary Limited Primary Target Firms and a retail property development owned by Pan Africa Phase 2 Proprietary Limited
Panel:
A Kessery (Presiding Member)
T Vilakazi (Tribunal Member)
L Mncube (Tribunal Member)
Heard on:
28 February 2024
Order issued on:
28 February 2024
Reasons Issued on:
20 March 2024
REASONS FOR DECISION
Approval
[1]
On 28 February 2024, the Competition Tribunal (“the Tribunal”) unconditionally approved the large merger whereby Redefine Retail Proprietary Limited (“Redefine”) intends to acquire 50.8% of the issued share capital of and claims against Pan Africa Development Proprietary Limited (“Pan Africa”) and a retail property development owned by Pan Africa Phase 2 Proprietary Limited (“Pan Africa Phase 2”). Post-merger, Redefine will have sole control over Pan Africa and Pan Africa Phase 2.
Parties to the transaction and their activities
Primary acquiring firm
[2]
The primary acquiring firm is Redefine a company incorporated under the laws of South Africa. Redefine is 100% controlled by Redefine Properties Limited (“Redefine Properties”). Redefine Properties is a Real Estate Investment Trust which is listed on the Johannesburg Stock Exchange and is not controlled by any single shareholder. Redefine and all the firms directly and indirectly controlled by it will collectively be referred to as “Redefine”.
[3]
Redefine is active in the property sector, with a property portfolio comprising a diverse range of properties including office, retail, residential and industrial space situated throughout South Africa.
Primary target firm
[4]
The primary target firms are:
4.1. Pan Africa, a company incorporated under the laws of South Africa […] by Atterbury Property Fund Proprietary Limited (“Atterbury”) and Talis Property Fund (Pty) Ltd.; and
4.2. A retail property development owned by Pan Africa Phase 2. The retail space to be developed by Pan Africa Phase 2 is a wholly owned subsidiary of Atterbury.
[5]
Pan Africa is active in property development in South Africa. Currently, Pan Africa’s sole property is Pan Africa Shopping Centre, a community centre situated at the Corner of Watt and Third Avenue, Alexandra, Gauteng. Pan Africa Shopping Centre has a gross lettable area (“GLA”) size of 15 767 m² of retail space.
[6]
Pan Africa and the entities that it controls will collectively be referred to as (“Pan Africa”).
Proposed transaction and rationale
Transaction
[7]
[…] Redefine intends to acquire Atterbury’s 50.887% shares in, and 100% of Atterbury’s claims against, Pan Africa from Atterbury. Redefine will exercise sole control over Pan Africa and all the related developments as envisaged by section 12(2) of the Competition Act No. 89 of 1998, as amended (“the Act”).
[8]
In an indivisible transaction, Pan Africa Phase 2 will develop the adjacent property into retail space by approximately 3 800m2and sell this to Redefine […]
Competition assessment
[11] The Commission considered the activities of the merging parties and found that the proposed transaction gives rise to a horizontal overlap as Redefine owns retail properties, and the Pan Africa Shopping Centre and related developments are retail properties.
[12] The market for rentable retail space can be divided into four categories, namely, convenience centres, comparative centres, lifestyle centres and value centres.[1] In the current transaction, the Commission did not conclude on the exact product market. However, it assessed the impact of the proposed transaction in the retail property market considering comparative centres.
[13] The Tribunal has previously considered the relevant geographic market for comparative retail centres as a 15km radius surrounding the target centre.[2]The Commission therefore assessed the market for comparative retail centres within a 15km radius of Pan Africa Shopping Centre and the related development properties.
[14] The merged entity will have an estimated market share of 20% based on GLA, with a market share accretion of 3%. The merged entity will continue to face competition from other comparative retail centres such as Hyde Park Corner, Carlton Centre, Newtown junction, Campus square, Norwood Mall and Cresta Shopping Centre, amongst others.
[15] On this basis, we agree with the Commission’s conclusion that the proposed transaction is unlikely to result in a substantial prevention or lessening of competition in any affected market.
Public interest assessment
Employment
[16] The merging parties submitted that the proposed transaction will not give rise to employment concerns. The Commission engaged with the respective employee representatives and no concerns were raised.
[17] The employee representative of Atterbury, the current property manager confirmed that there are 4 employees who are not employed by Pan Africa and are employed by Atterbury, the current property manager of the Pan Africa Shopping Centre. These employees will be transferred to Redefine, on the exact same employment terms.
[18] We are of the view that the proposed transaction is unlikely to raise significant employment concerns.
Spread of ownership
[19] Pre-merger, Pan Africa has an ownership by historically disadvantaged persons (“HDPs”) of 11.495% and Pan Africa Phase 2 has an ownership by HDPs of 22.59%.
[20] Redefine has an ownership by HDPs of 42.40%. As the merger will result in Redefine acquiring 50.887% of Pan Africa, Pan Africa will have an ownership by HDPs of 21.57%. This is an increase of approximately 10.08% from the pre- merger position.
[21] Post merger, Pan Africa Phase 2’s ownership by HDPs will increase to 42.40% which is an increase of approximately 19.81% from the pre-merger position.
[22] Considering the above, we are satisfied that the proposed transaction is unlikely to raise any concerns from a public interest perspective.
Conclusion on public interest
[23] We are not aware of any other public interest concerns arising in this case.
Third party views
[24] No third parties, whether customers or competitors, expressed concerns about the proposed merger to the Tribunal.
Conclusion
[25] The proposed transaction is unlikely to substantially prevent or lessen competition in any relevant market and does not raise any public interest concerns.
[26] We therefore approve the proposed transaction unconditionally.
Signed by:Anisa Kessery
Signed at:2024-03-20 11:23:59 +02:00
Reason:Witnessing Anisa Kessery
20 March 2024
Date
Adv. Anisa Kessery
Prof. Thando Vilakazi and Prof. Liberty Mncube concurring
Tribunal Case Manager: Theodora Michaletos For the Merging Parties: Vani Chetty Competition Law (Pty) Ltd For the Commission: Wiri Gumbie, Ratshi Maphwanya and Makati Seekane
[1] Atterbury Investment Limited, Attfund Retail Limited and Mantrablox Proprietary Limited Case No: 29/LM/Jun03.
[2] Primegrowth Retail Property (Pty) Ltd and Hyprop Investment Proprietary Limited in respect of the rental enterprise known as Atterbury Value Mart Case No: LM209Mar21 and Pareto Limited and Fountainhead Property Trust Scheme Pareto Limited Case No: LM199Feb14.
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