Synergy Income Fund Ltd and Another v Competition Commission, In re: Synergy Income Fund Ltd v Khuthala Alliance (Pty) Ltd (11/AM/Jan12) [2012] ZACT 62; [2012] 2 CPLR 400 (CT) (20 July 2012)

Synergy Income Fund Ltd and Another v Competition Commission, In re: Synergy Income Fund Ltd v Khuthala Alliance (Pty) Ltd (11/AM/Jan12) [2012] ZACT 62; [2012] 2 CPLR 400 (CT) (20 July 2012)

The Tribunal found that while the proposed merger between Synergy Income Fund Ltd and Khuthala Alliance (Pty) Ltd is unlikely to substantially prevent or lessen competition due to the lack of geographic overlap, the exclusivity clause in the lease agreement between Spar and Khuthala raises a significant public interest concern. This clause prevents small businesses from gaining access to rentable retail space in the King Senzangakhona Shopping Centre, thereby foreclosing competition from independent retailers and speciality stores. The Tribunal concurred with the Commission's findings and considered the imposition of conditions requiring the merging parties to negotiate the removal of the...

Citation
[2012] ZACT 62
Parties
Applicant: Synergy Income Fund Ltd; Applicant: Khuthala Alliance (Pty) Ltd; Respondent: Competition Commission
Court
Competition Tribunal
Jurisdiction
South Africa
Judgment Date
20 July 2012
Case Number
11/AM/Jan12
Procedural Posture
Intermediate Merger / Conditional Approval
Outcome
The intermediate merger is approved subject to conditions.
Judges
Andreas Wessels, Medi Mokuena, Takalani Madima
Legal Topics
Intermediate Merger Review, Public Interest Exclusivity, Anchor Tenant Agreements, Barriers to Entry
Competition Law Commercial and Corporate Intermediate Merger Review Public Interest Exclusivity Anchor Tenant Agreements Barriers to Entry

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Parties

Synergy Income Fund Ltd

Applicant

Khuthala Alliance (Pty) Ltd

Applicant

Competition Commission

Respondent

Procedural Posture

Intermediate Merger / Conditional Approval

Legal Issues

  1. 1 Does the exclusivity clause in the lease agreement between Spar and Khuthala Alliance (Pty) Ltd raise a public interest concern under section 12A(3)(c) of the Competition Act?
  2. 2 Is the proposed intermediate merger likely to substantially prevent or lessen competition in any relevant market?
  3. 3 Are the conditions imposed by the Tribunal appropriate and proportional to address the identified public interest concern?

Ratio Decidendi

The Tribunal found that while the proposed merger between Synergy Income Fund Ltd and Khuthala Alliance (Pty) Ltd is unlikely to substantially prevent or lessen competition due to the lack of geographic overlap, the exclusivity clause in the lease agreement between Spar and Khuthala raises a significant public interest concern. This clause prevents small businesses from gaining access to rentable retail space in the King Senzangakhona Shopping Centre, thereby foreclosing competition from independent retailers and speciality stores. The Tribunal concurred with the Commission's findings and considered the imposition of conditions requiring the merging parties to negotiate the removal of the...

Court Disposition

The intermediate merger is approved subject to conditions.

Orders

  • The merging parties shall negotiate with Spar and its franchisee in good faith to have the exclusivity clause removed at the renewal of the lease in the King Senzangakhona Shopping Centre in 2018.
  • The merging parties shall provide a report to the Competition Commission within 30 days after entering into a new lease agreement with Spar and its franchisee in the King Senzangakhona Shopping Centre in 2018, detailing compliance with this condition.