Sycom Property Fund Collective Investment Scheme in Property v Grapnel Property Investments (Pty) Ltd and Another (06/LM/Jan12) [2012] ZACT 17 (8 March 2012)
The Tribunal found that the proposed transaction would result in Sycom increasing its interest in Paarl Mall from 70% to 100%, thereby acquiring sole control. Although there is an overlap in the geographic market for minor regional centres in the Paarl/Wellington/Franschhoek node and in the market for rentable...
Source-derived case information.
- Citation
- [2012] ZACT 17
- Parties
- Applicant: Sycom Property Fund Collective Investment Scheme in Property; Respondent: Grapnel Property Investments (Pty) Ltd; Respondent: Changing Tides 91 (Pty) Ltd
- Court
- Competition Tribunal
- Jurisdiction
- South Africa
- Case Number
- 06/LM/Jan12
- Procedural Posture
- Merger Application / Approval
- Outcome
- Merger approved unconditionally.
- Judges
- Norman Manoim, Yasmin Carrim, Takalani Madima
- Legal Topics
- Merger Control, Market Share Analysis, Public Interest, Sole Control Acquisition
Source-derived case record
Summary, issues, holding and outcome
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Parties
Sycom Property Fund Collective Investment Scheme in Property
Applicant
Grapnel Property Investments (Pty) Ltd
Respondent
Changing Tides 91 (Pty) Ltd
Respondent
Procedural Posture
Merger Application / Approval
Legal Issues
- 1 Whether the proposed merger will substantially prevent or lessen competition in any relevant market.
- 2 Whether the transaction raises any public interest concerns, including adverse effects on employment.
Ratio Decidendi
The Tribunal found that the proposed transaction would result in Sycom increasing its interest in Paarl Mall from 70% to 100%, thereby acquiring sole control. Although there is an overlap in the geographic market for minor regional centres in the Paarl/Wellington/Franschhoek node and in the market for rentable A-grade office space in the Greater Woodmead node, the increase in Sycom's market share is minimal (from 14.04% to 14.43%). The Tribunal concluded that this increment is insufficient to substantially prevent or lessen competition. Furthermore, the merging parties confirmed that there would be no adverse effect on employment, and no other public interest issues were identified....
Court Disposition
Merger approved unconditionally.
Orders
- The proposed merger between Sycom Property Fund Collective Investment Scheme in Property and Grapnel Property Investments (Pty) Ltd and Changing Tides 91 (Pty) Ltd is approved unconditionally.
Full Case Text
Judgment text and source record
43 paragraphs
COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: 06/LM/Jan12
In the matter between:
Sycom Property Fund Collective
Investment Scheme in property …...............................................Acquiring Firm
And
Grapnel Property Investments (Pty) Ltd and
Changing Tides 91 (Pty) Ltd …........................................................................Target Firm
Panel : Norman Manoim (Presiding Member) Yasmin Carrim (Tribunal Member) Takalani Madima (Tribunal Member)
Heard on : 15 February 2012
Order issued on : 15 February 2012
Reasons issued on : 08 March 2012
Reasons for Decision
Approval
On 15 February 2012 the Competition Tribunal (“Tribunal”) approved the merger between Sycom Property Fund Collective Investment in property and two firms, namely Grapnel Property Investments (Pty) Ltd and Changing Tides 91 (Pty) Ltd. The reasons for approving the proposed transaction follow below.
Parties to the transaction
The primary acquiring firm is Sycom Property Fund Collective Investment in property (“Sycom”), a company who either directly or indirectly invests in rental property in the retail and office space sectors in Gauteng and the Western Cape. Pre-merger, Sycom owns a 70% interest in Paarl Mall (Western Cape).
One of the primary target firms is Grapnel Property Investments (Pty) Ltd (“Grapnel”) in respect of a 15% interest in Paarl Mall, located in the Western Cape and a 100% interest in a property letting enterprise known as Cadbury Office Block, located in Woodmead, Gauteng. Grapnel is a property fund development, investment and management company.
The second primary target firm is Changing Tides 91 (Pty) Ltd (“Changing Tides”) in respect of a 15% interest in Paarl Mall. Changing Tides is a property development and property investment company.
Proposed transaction
The proposed transaction is structured into three components as follows:
Sycom’s acquisition of Cadbury Office Block from Grapnel as a going concern.
Sycom’s acquisition of a 15% undivided share of Paarl Mall held by Grapnel.
Sycom’s acquisition of a 15% undivided share of Paarl Mall held by Changing Tides.
As a result of the transaction, Sycom will increase its current 70% interest to a 100% interest in Paarl Mall by acquiring the remaining 30% from the target firms and will therefore exercise sole control over both Paarl Mall and Cadbury Office Block.
Rationale for transaction
The primary acquiring firm already holds a 70% interest in Paarl Mall and would like to exercise sole control over Paarl Mall. The primary acquiring firms feels that the acquisition of Cadbury Office Block would be a good investment opportunity.
Grapnel wishes to reduces its debt and increase its capital for further development opportunities.
Impact on competition
There is an overlap between the activities of the parties in the geographic market for minor regional centres in the Paarl/ Wellington/ Franschhoek node in the Western Cape Province due to Sycom’s pre-merger 70% interest n Paarl Mall.
An overlap exists in the market for rentable A-grade office space in the Greater Woodmead node, located in the Gauteng Province, as both Sycom and Grapnel own various A-grade office spaces in such node. As a result of the transaction, Sycom’s estimated market share in the relevant market will increase from 14.04% to 14.43% and therefore the proposed transaction is unlikely to substantially prevent or lessen competition.
Public interest
The merging parties confirmed that there will be no adverse effect on employment as a result of the proposed transaction.1 No other public interest issues arise as a result of this transaction.
CONCLUSION
We conclude that the proposed transaction is unlikely to substantially prevent or lessen competition in any relevant market. Furthermore, the proposed transaction raises no public interest concerns. Accordingly, we approve the proposed merger unconditionally.
____________________ 08 March 2012
NORMAN MANOIM DATE
Yasmin Carrim and Takalani Madima concurring.
Tribunal researcher: Nicola Ilgner
For the merging parties: Vani Chetty Competition law
For the Commission: Mogalane Matsimela
1See page 110 of the record.
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