Resilient Properties (Pty) Ltd v Casadobe Props 75 (Pty) Ltd (28/LM/Apr11) [2011] ZACT 40 (28 June 2011)
- Citation
- [2011] ZACT 40
- Status
- Judgment
- Jurisdiction
- South Africa
- Court
- Competition Tribunal
- Panel
- Norman Manoim, Andreas Wessels, Yasmin Carrim
- Case number
- 28/LM/Apr11
More details
- Court
- Competition Tribunal
- Panel
- Norman Manoim, Andreas Wessels, Yasmin Carrim
- Case number
- 28/LM/Apr11
On this page
Professional case brief
Research organized from the available case record
01
Holding and result
The Tribunal found that the proposed transaction constitutes a change from joint to sole control over the Grove Mall, with no increase in market share or alteration of market structure. The presence of other competing shopping centres within 20 kilometres of the Equestria node ensures that competition remains unaffected. No vertical effects or public interest concerns were identified. Accordingly, the merger is unlikely to substantially prevent or lessen competition and is approved unconditionally.
Court disposition
Merger approved unconditionally.
Orders
- The proposed transaction is approved unconditionally.
02
Material facts
Parties
Resilient Properties (Pty) Ltd
Applicant Counsel: Vani ChettyCasadobe Props 75 (Pty) Ltd
Respondent03
Procedural history
Posture
Merger Application / Approval
04
Questions and positions
Legal issues
- 01
Whether the proposed merger from joint to sole control over the Grove Mall will substantially prevent or lessen competition in the relevant market.
- 02
Whether any public interest concerns arise from the transaction.
Party arguments
- Applicant
- Resilient Properties argued that acquiring the remaining 50% stake in the Grove Mall would not alter the competitive dynamics in the market, as it already holds joint control and the transaction merely shifts to sole control. The applicant asserted that there are sufficient competing shopping centres within the relevant geographic area, and that the transaction aligns with its expansion strategy.
- Respondent
- Casadobe Props 75 submitted that its decision to sell its stake was motivated by a desire for autonomy and the need to realise its investment for reinvestment elsewhere. The respondent did not oppose the merger and agreed that the transaction would not negatively impact competition or public interest.
05
Court’s reasoning
Legal principles
- 01
Accucap Investment Pty Ltd and Old Mutual Life Assurance Company Case No.: 51/LM/Jul09
A merger that results only in a change from joint to sole control, without market share accretion, is unlikely to substantially prevent or lessen competition.
- 02
Government Employees Pension Fund and Denel (Pty) Ltd 42/LM/May02
The relevant product market for competition assessment is the provision of rentable retail space for minor regional shopping centres, and the relevant geographic market is the Equestria node.
06
Ratio, limits and disposition
Ratio decidendi
The Tribunal found that the proposed transaction constitutes a change from joint to sole control over the Grove Mall, with no increase in market share or alteration of market structure. The presence of other competing shopping centres within 20 kilometres of the Equestria node ensures that competition remains unaffected. No vertical effects or public interest concerns were identified. Accordingly, the merger is unlikely to substantially prevent or lessen competition and is approved unconditionally.
Obiter and limits
- The Tribunal noted that the transaction provides Casadobe with an opportunity to realise its investment and pursue other developments.
- The Tribunal confirmed that no public interest issues arise from the proposed transaction.
Court disposition
Merger approved unconditionally.
- The proposed transaction 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: 28/LM/Apr11
In the matter between:
Resilient Properties (Pty) Ltd …........................................................................Acquiring Firm
And
Casadobe Props 75 (Pty) Ltd …...............................................................................Target Firm
Panel : Norman Manoim (Presiding Member)
Andreas Wessels (Tribunal Member)
Yasmin Carrim (Tribunal Member)
Heard on : 08/06/2011
Order issued on : 08/06/2011
Reasons issued on : 28/06/2011
Reasons for Decision
APPROVAL
On 08 June 2011 the Competition Tribunal (“Tribunal”) unconditionally approved the proposed property transaction involving
Resilient Properties and Casadobe Props. The reasons for approval of the proposed transaction follow below.
THE
TRANSACTION AND RATIONALE
This is a property merger involving the sale of a single property, being a shopping centre known as the Grove Mall situated in Equestria, Pretoria. In terms of the proposed transaction, the primary acquiring firm, Resilient Properties (Pty) Ltd (“Resilient”)
which has an existing stake of 50% in the Grove Mall, intends to acquire the remaining 50% which is owned by the primary target firm, Casadobe Props 75 (Pty) Ltd (“Casadobe”).
Essentially the transaction is a move from joint to sole control, pursuant which Resilient will have sole control over the Grove Mall.
Resilient is a property investment company which is mainly active in the rental of property market for retail space throughout South Africa. Resilient however does not own any rentable retail space in Equestria Pretoria, except its 50% share in the Grove Mall. Casadobe is also a property investment company active in rentable retail space.
For Resilient the proposed transaction is in line with its future expansion goal to increase its ownership profile. Casadobe wishes to dispose of its 50% share in the Grove Mall as it prefers to be autonomous with unfettered discretion to make its decisions.
Further, the proposed transaction is an opportunity for Casadobe to realise its investment as it requires cash to re-invest in other developments.
COMPETITION
ASSESSMENT
The merger gives rise to a horizontal overlap in respect to the provision of rentable retail space at the Grove Mall. The Grove mall is categorised as a minor regional centre. The merging parties and the Commission described the relevant product market as the market for provision of minor rentable retail space for minor regional shopping centre based on a previous Tribunal decision1, and the relevant geographic market as Equestria node based on the type and size of the property2.
The Commission found that the proposed transaction is unlikely to substantially prevent or lessen competition as it will not change
the structure of the market given that it is merely a change from joint to sole control. Hence there is no market share accretion as a result of the merger. The Commission also found that there are other shopping centres within 20 kilometres from Equestria node which are not owned by the merging parties, and which compete with the Grove mall.
This merger does not give rise to any vertical effects.
PUBLIC
INTEREST
No public interest issues arise from the proposed transaction.
CONCLUSION
Based on the above we conclude that it is unlikely that the proposed merger would lead to a substantial prevention or lessening of competition in the property market. Accordingly the proposed deal is approved unconditionally.
____ 28/06/2011
N Manoim Date
Y Carrim and A Wessels concurring
Tribunal Researcher: Londiwe Senona
For the merging parties: Vani Chetty Competition Law
For the Commission: Dineo Mashego
1See Accucap Investment Pty Ltd and Old Mutual Life Assurance Company Case No.: 51/LM/Jul09.
2See Government Employees Pension Fund and Denel (Pty) Ltd 42/LM/May02.
3
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