SA Retail Properties (Pty) Ltd v AFHCO Holdings (018762) [2014] ZACT 103 (16 July 2014)
- Citation
- [2014] ZACT 103
- Status
- Judgment
- Jurisdiction
- South Africa
- Court
- Competition Tribunal
- Panel
- A Roskam, I Valodia, F Tregenna
- Case number
- 018762
More details
- Court
- Competition Tribunal
- Panel
- A Roskam, I Valodia, F Tregenna
- Case number
- 018762
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 not result in significant horizontal overlap in the relevant property markets, as the geographic proximity between the parties' properties was insufficient to raise competition concerns. The post-merger market shares of the parties were not substantial, and competitors would retain a dominant presence in the market. Furthermore, no public interest issues were identified that would warrant prohibition or conditions. Accordingly, the Tribunal approved the transaction unconditionally.
Court disposition
Merger approved unconditionally.
Orders
- The proposed transaction between SA Retail Properties (Pty) Ltd and AFHCO Holdings is approved without conditions.
02
Material facts
Parties
SA Retail Properties (Pty) Ltd
Applicant Counsel: Desmond RudmanAFHCO Holdings
RespondentAmounts and remedies
- SA Corp Post Merger Market Share (retail Property Within Johannesburg CBD Node): 16.6
- SA Corp Total GLA (retail Property Within Johannesburg CBD Node): 5,506
- AFHCO Total GLA (retail Property Within Johannesburg CBD Node): 40,926
- Competitors' Market Share (retail Property Within Johannesburg CBD Node): 83.4
- Competitors' Total GLA (retail Property Within Johannesburg CBD Node): 246,213
03
Procedural history
Posture
Merger Approval / Final Determination
04
Questions and positions
Legal issues
- 01
Whether the proposed merger between SA Retail Properties and AFHCO Holdings is likely to substantially prevent or lessen competition in the relevant markets.
- 02
Whether any public interest concerns arise from the proposed transaction.
Party arguments
- Applicant
- SA Retail Properties argued that the acquisition would allow SA Corp to gain an experienced management team in the residential property sector and that the transaction would not result in significant market concentration or anti-competitive effects. The applicant maintained that there was no meaningful geographic overlap in the relevant property markets and that competitors would continue to hold substantial market shares post-merger.
- Respondent
- AFHCO Holdings and its shareholders supported the transaction, stating that the sale would allow them to realise their investment at an appropriate time. The respondent did not raise any competition or public interest concerns and concurred with the applicant's assessment of market impact.
05
Court’s reasoning
Legal principles
- 01
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
Competition Commission Guidelines
The assessment of horizontal overlap requires analysis of geographic proximity and market share to determine competitive impact.
- 03
Competition Act, No. 89 of 1998
Public interest considerations must be evaluated in merger proceedings, including the effect on employment and the ability of small businesses to compete.
06
Ratio, limits and disposition
Ratio decidendi
The Tribunal found that the proposed merger would not result in significant horizontal overlap in the relevant property markets, as the geographic proximity between the parties' properties was insufficient to raise competition concerns. The post-merger market shares of the parties were not substantial, and competitors would retain a dominant presence in the market. Furthermore, no public interest issues were identified that would warrant prohibition or conditions. Accordingly, the Tribunal approved the transaction unconditionally.
Obiter and limits
- The Tribunal noted that the transaction would provide SA Corp with access to an established management team in the residential sector, which could enhance operational efficiency.
- The Tribunal observed that the sale offered AFHCO shareholders an opportunity to realise their investment at a suitable time in their careers.
Court disposition
Merger approved unconditionally.
- The proposed transaction between SA Retail Properties (Pty) Ltd and AFHCO Holdings 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: 018762
In the matter between:
SA RETAIL PROPERTIES (PTY)
LTD
Primary Acquiring Firm
And
AFHCO
HOLDINGS
Primary Target Firm
Panel
: Mr A Roskam (Presiding Member)
: Prof. I Valodia (Tribunal Member)
: Prof. F Tregenna (Tribunal Member)
Heard on : 18 June 2014
Order Issued on : 18 June 2014
Reasons Issued on : 16 July 2014
Reasons for Decision
Approval
[1] On 18 June 2014, The Competition Tribunal ("Tribunal") unconditionally approved the acquisition by SA Retail (Pty) Ltd ("SA Retail") to acquire the entire issued share capital in AFHCO Holdings (Pty) Ltd ("AFHCO"). Post- merger SA Corporate Real Estate Fund ("SA Corp") will have sole indirect control over AFHCO.
[2] The reasons for approving the proposed transaction follow.
Parties to the transaction
[3] The primary acquiring firm is SA Retail, a wholly owned subsidiary of SA Corporate Real Estate Fund Nominee ("SACN"). SACN is controlled by SA Corp, a company listed on the Johannesburg Securities Exchange. SA Corp's shareholders with an interest of more than 5% include; Government Employment Pension Fund, Coronation Fund Managers and Stanlib Asset Management. SACN holds 100% shares in Blue Heron (Pty) Ltd, Dune Lark Investments, Erf 84-85-86 Shakes Head (Ply) Ltd, Wood Ibis Investments (Ply) Ltd, Grey Heron Investments (Pty) Ltd, Whirlprops 25 (Ply) Ltd, Rock Kestel Investments (Ply) Ltd and Stonedell Investments (Ply) Ltd. SACN holds 75% shares in Umlazi Mega City (Pty) ltd,
[4] The primary target firms is AFHCO, its shareholders include; IDEA Managed Fund, Mr Wayne Plit and Ms Renney Plit, AFHCO holds 100% interest in various companies including AFHCO (Ply) Ltd ("AFHCO Sub"), AFHCO Property (Ply) Ltd, Urban Housing Finance (Ply). Ltd and Protea Glen Housing (Pty) Ltd. AFHCO Sub controls more than 11 companies,
Proposed Transaction
[5] SA Corp through its subsidiary SA Retail intends to acquire the entire issued share capital in AFHCO. Post-merger SA Corp will have sole indirect control over AFHCO.
Rationale
[6] The proposed transaction offers SA Corp the opportunity to acquire an established and experienced management team in the residential
sector. For AFHCO shareholders the sale provides an opportunity to realise their investment at an appropriate time in their careers.
Relevant Market and Impact on Competition
[7] SA Retail group is a collective investment scheme which invests in property (also known as a property unit trust). It has a total of 134 properties that comprises of 26 retail properties, 89 industrial properties and 19 office properties and they are all located in the Gauteng Province. Relevant for this transaction are the 124 properties.
[8] AFHCO is a property investment company that has a total of 62 properties comprising of 27 residential properties, 31 retail properties, 1 light industrial property and 4 office properties mostly located within the Johannesburg Central Business District ("CBD") and Newtown.
[9] The proposed transaction does result in horizontal overlap arising in relation to provision of B-Grade and C-Grade office space, the market for provision of rental)le retail space in convenience centres and the market for provision of rentable space in light industrial property.
[10] In the market for Grade B and C office properties 7 properties were identified as overlapping post the transaction. However, the Competition Commission found that there is no geographic overlap in the areas of rentable office space in B-Grade and C-Grade and the market for the provision of rentable space in light industrial property. The B-Grade and C-Grade properties. are not within the same node as AFCHO, the B-Grade is within a 26km distance and the C Grade office properties are within a 5km distance.
[11] The Commission also considered the market for provision of rentable space in retail property within the 6km distance of the Johannesburg CBD node. In this node SA Corp has a total GLA of 5506m' and a market share of 2.2% and AFHCO has a total GLA of 40926 and a market share of 14.4%. SA Corp will have a post -merger market share of 16.6%. The Commission found that the parties post-merger estimated market shares were not significant to raise competition concerns and competitors in the market still have a market share of 83.4% and a GLA of 246 213m2 • Competitors include; Bel Air shopping centre (7.3%), Centro Continental (6.0%), Thrupps Centre (5.4%) and Bramley shopping
centre.
[12] In the market of provision of rentable space in light industrial property, the Commission found that none of the SA Corp properties
are located within the South-West Industrial node where AFHCO's one property is located therefore there is no geographic overlap.
Conclusion
[12] In light of the above we conclude that the proposed transaction is unlikely ta substantially prevent or lessen competition in the market for provision of rentable of 8-Grade and C-Grade office space, the market for provision of rentable retail space in convenience centre and the market for provision of rentable space in light industrial property. In addition, no public interest issues arise from the proposed transaction. Accordingly we approve the proposed transaction unconditionally.
Prof. F Tregenna
Prof. I Valodia and Mr A Roskam concurring
16 July 2014
DATE
Tribunal Researcher: Molebaheng Moleko
For the merging parties: Desmond Rudman - Webber Wentzel
For the Commission: Hardin Ratshisusu, Xolela Nokele, Seema Nunkoo
and Dineo Mashego.
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