Setso Holdco Proprietary Limited v Setso Property Fund Proprietary Limited (LM185Dec16) [2017] ZACT 3 (11 January 2017)
- Citation
- [2017] ZACT 3
- Status
- Judgment
- Jurisdiction
- South Africa
- Court
- Competition Tribunal
- Panel
- Norman Manoim, AW Wessels, Yasmin Carrim
- Case number
- LM185Dec16
More details
- Court
- Competition Tribunal
- Panel
- Norman Manoim, AW Wessels, Yasmin Carrim
- Case number
- LM185Dec16
On this page
Professional case brief
Research organized from the available case record
01
Holding and result
The Tribunal found that the proposed transaction does not result in any overlap in the provision of office and retail properties, as the acquiring group is not active in these markets. The management of the target properties will remain unchanged, and there will be no adverse effect on employment. The transaction raises no competition or public interest concerns. Therefore, the merger is approved unconditionally.
Court disposition
The proposed merger is approved unconditionally.
Orders
- The merger between Setso Holdco Proprietary Limited and Setso Property Fund Proprietary Limited is approved without conditions.
02
Material facts
Parties
Setso Holdco Proprietary Limited
Applicant Counsel: Lizel BlignautSetso Property Fund Proprietary Limited
Respondent Counsel: Albert Aukema03
Procedural history
Posture
Merger Control / Approval of Proposed Merger
04
Questions and positions
Legal issues
- 01
Does the proposed merger substantially prevent or lessen competition in any relevant market?
- 02
Does the proposed transaction raise any public interest concerns, including employment effects?
Party arguments
- Applicant
- The merging parties argued that there is no overlap in the activities of the acquiring group and the target firm, as the acquiring group is not active in the provision of office and retail properties in South Africa. They further submitted that the management of the target properties by Abreal (Pty) Ltd will continue post-merger, ensuring no adverse effect on employment. No other public interest concerns were identified.
- Respondent
- The Competition Commission agreed with the merging parties, confirming that there is no competition concern due to the lack of overlap in activities. The Commission also concurred that the merger would not negatively impact employment and that no other public interest issues arise from the transaction.
05
Court’s reasoning
Legal principles
- 01
Section 12A(1)(a) of the Competition Act, 89 of 1998
A merger may only be prohibited if it is likely to substantially prevent or lessen competition in any relevant market.
- 02
Section 12A(3) of the Competition Act, 89 of 1998
Public interest considerations, including employment effects, must be assessed in merger proceedings.
06
Ratio, limits and disposition
Ratio decidendi
The Tribunal found that the proposed transaction does not result in any overlap in the provision of office and retail properties, as the acquiring group is not active in these markets. The management of the target properties will remain unchanged, and there will be no adverse effect on employment. The transaction raises no competition or public interest concerns. Therefore, the merger is approved unconditionally.
Obiter and limits
- The Tribunal noted that the transaction forms part of a broader restructuring in the property sector, but this does not affect the competitive assessment.
- The Tribunal observed that the continued management of the properties by Abreal (Pty) Ltd provides stability for employees and stakeholders.
Court disposition
The proposed merger is approved unconditionally.
- The merger between Setso Holdco Proprietary Limited and Setso Property Fund Proprietary Limited 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: LM185Dec16
In the matter between:
SETSO
HOLDCO PROPRIETARY
LIMITED
Primary Acquiring Firm
and
SETSO
PROPERTY FUND PROPRIETARY
LIMITED Primary Target Firm
Panel
: Norman Manoim (Presiding Member)
: AW Wessels (Tribunal Member)
: Yasmin Carrim (Tribunal Member)
Heard on
: 15 December 2016
Order Issued on
: 15 December 2016
Reasons Issued on : 11 January 2017
Reasons for Decision
Approval
[1] On 15 December 2016, the Competition Tribunal (''Tribunal") approved the proposed transaction between Setso Holdco Proprietary
Limited and Setso Property Fund Proprietary Limited.
[2] The reasons for approving the proposed transaction follow.
Parties to proposed transaction
Primary acquiring firm
[3] The primary acquiring firm is Setso Holdco (Ply) Ltd ("Setso Holdco"), a company incorporated in accordance with the laws of the Republic of South Africa.
[4] Setso Holdco is a newly established firm and does not provide any products or services. It is controlled by African Rainbow Capital (Pty) Ltd ("ARC"), with 51.5% of the shareholding, with the remaining shareholding being held by Signature Investment Holdings (Pty) Ltd ("Signature"). Setso Holdco does not control any firm.
[5] ARC is a wholly-owned subsidiary of Ubuntu-Botho Investments (Pty) Ltd ("UBI"). UBl's shareholding is held by Sizanani-Thusanang-Helpmekaar (Ply) Ltd ("Sizanani") with 68.8% and various individuals. Sizanani is a wholly owned subsidiary of Ubuntu Ubuntu Commercial Enterprises (Ply) Ltd ("Ubuntu-Ubuntu"). Ubuntu-Ubuntu is ultimately controlled by the various Motsepe Family Trusts.
[6] Signature is an investment holding business aimed at generating long term returns from stable investments in the real estate and private equity space markets. Signature holds no other investments at present and the current transaction represents its first investment.
[7] ARC, UBI and all their shareholders and subsidiaries will collectively be referred to as the Acquiring Group.
Primary target firm
[8] The primary target firm is Setso Property Fund (Pty) Ltd ("Setso Property"), a company incorporated in accordance with the laws of the Republic of South Africa. Setso Property is controlled by the Pivotal Fund Limited ("Pivotal").
[9] Setso Property does not have any business activities as it is a newly established firm created for the purposes of this transaction.
Proposed transaction and rationale
Primary acquiring firm
[10] Setso Property's portfolio fits in with ARC's investment into real estate.
[11] In a separate but related transaction Redefine Properties Limited ("Redefine") acquired Pivotal Fund Limited ("Pivotal").
Redefine was not interested in acquiring all of Pivotal's properties. The properties in question ("the Target Properties") were excluded from that particular transaction but are to be sold in accordance with the present transaction.
[12] In terms of the proposed transaction, Setso Holdco intends to acquire the entire share capital of Setso Property. Post-merger, Setso Holdco will control Setso Property. Further, Pivotal will transfer Target Properties to Setso Property.
Impact on competition
[13] The Commission considered the activities of the merging parties and found that there was no overlap, as the Acquiring Group is not active in the provision of office and retail properties in South Africa. Hence, in its view, the transaction raises no competition concerns.
Public interest
[14] The Target Properties are managed by Abreal (Pty) Ltd and this will continue to be the case post-merger. Because of this the merging parties submitted that the merger will have no adverse effect on employment, a view the Commission agreed with.
[15] The proposed transaction does not raise any other public interest concerns.
Conclusion
[16] In light of the above, we conclude that the proposed transaction is unlikely to substantially prevent or lessen competition in any relevant market.
[17] In addition, no public interest issues arise from the proposed transaction. Accordingly, we approve the proposed transaction
unconditionally.
11 January 2017
DATE
_____
Mr Norman Manoim
Mr AW Wessels and Ms Yasmin Carrim concurring
Case Manager:
Kameel Pancham
For the merging parties: Lizel Blignaut of ENSafrica and Albert Aukema of Cliffe
Dekker Hofmeyr Inc.
For the Commission: Zintle Siyo
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