Transnet Soc Ltd v Certain Portions of the Durban International Airport held by the Airports Company South Africa Ltd (16/LM/Feb12) [2012] ZACT 26 (16 April 2012)
- Citation
- [2012] ZACT 26
- Status
- Judgment
- Jurisdiction
- South Africa
- Court
- Competition Tribunal
- Panel
- Andreas Wessels, Medi Mokuena, Taki Madima
- Case number
- 16/LM/Feb12
More details
- Court
- Competition Tribunal
- Panel
- Andreas Wessels, Medi Mokuena, Taki Madima
- Case number
- 16/LM/Feb12
On this page
Professional case brief
Research organized from the available case record
01
Holding and result
The Tribunal found that the proposed transaction results in a minor overlap in the market for rentable industrial property in Durban, with Transnet's post-merger market share below 10%. The intended use of the property for port development further reduces any horizontal competition concerns. No job losses or other public interest issues arise from the merger. Third party commercial interests, such as competing offers for the property, are not relevant to the competition or public interest assessment under the Act. Accordingly, the merger is unlikely to substantially prevent or lessen competition and does not raise public interest concerns.
Court disposition
Merger approved unconditionally.
Orders
- The proposed transaction is approved unconditionally.
02
Material facts
Parties
Transnet Soc Limited
Applicant Counsel: Webber WentzelAirports Company South Africa Limited
Respondent Counsel: Werksmans03
Procedural history
Posture
Merger Application / Approval Hearing
04
Questions and positions
Legal issues
- 01
Whether the proposed property transaction will substantially prevent or lessen competition in any relevant market.
- 02
Whether the merger raises any public interest concerns under the Competition Act.
- 03
Whether third party commercial interests are relevant to the competition assessment.
Party arguments
- Applicant
- Transnet argued that the acquisition of the property is strategically important for the development of a dig out port, which will address future capacity needs on the Gauteng-Durban corridor. The property will be used primarily for port development, not for industrial rental, minimizing any competitive overlap. Transnet asserted that no job losses would result from the transaction and that the deal serves national infrastructure interests.
- Respondent
- Airports Company South Africa Limited submitted that the property is no longer used as an airport, as operations have moved to King Shaka International Airport. The sale is commercially justified, and there are no competition or public interest concerns. The respondent maintained that third party offers are not relevant to the Tribunal's assessment under the Competition Act.
05
Court’s reasoning
Legal principles
- 01
Competition Act, 1998 (Act No. 89 of 1998, as amended)
A merger may only be prohibited if it is likely to substantially prevent or lessen competition in any relevant market.
- 02
Competition Act, 1998 (Act No. 89 of 1998, as amended)
Public interest considerations must be assessed, including the impact on employment and other social factors.
06
Ratio, limits and disposition
Ratio decidendi
The Tribunal found that the proposed transaction results in a minor overlap in the market for rentable industrial property in Durban, with Transnet's post-merger market share below 10%. The intended use of the property for port development further reduces any horizontal competition concerns. No job losses or other public interest issues arise from the merger. Third party commercial interests, such as competing offers for the property, are not relevant to the competition or public interest assessment under the Act. Accordingly, the merger is unlikely to substantially prevent or lessen competition and does not raise public interest concerns.
Obiter and limits
- The Tribunal notes that concerns raised by third parties regarding commercial offers are outside the scope of competition and public interest considerations under the Act.
- The merging parties' confirmation of no job losses further supports the absence of public interest concerns.
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: 16/LM/Feb12
014027
In the matter between:
Transnet Soc Limited …..........................................................................Acquiring Firm
And
Certain portions of the Durban International Airport held by the
Airports Company South Africa
Limited …..........................................................................................................Target Firm
Panel : Andreas Wessels (Presiding Member) Medi Mokuena (Tribunal Member) Taki Madima (Tribunal Member)
Heard on : 11 April 2012
Order issued on : 11 April 2012
Reasons issued on : 16 April 2012
Reasons for Decision
Approval
On 11 April 2012 the Competition Tribunal (“Tribunal”) unconditionally approved a property transaction involving Transnet Soc Limited and certain portions of the Durban International Airport owned by the Airports Company South Africa Limited. The reasons for approval follow below.
Parties to transaction
The primary acquiring firm is Transnet Soc Limited (“Transnet”), a public company. Transnet is wholly owned by the South African Government. Its mandate is to operate South Africa’s major transport infrastructure.
The primary target firm is certain immovable property on which the former Durban International Airport is located and which is currently owned by Airports Company South Africa Limited (“ACSA”), a public company. ACSA previously operated an airport at the property (also see paragraph 6 below).
Proposed transaction and rationale for transaction
Transnet, through its Durban property unit, seeks to acquire the above-mentioned target property located at the former Durban International Airport.
According to Transnet, the proposed transaction is of strategic importance to Transnet and the South African Government given a planned phased development of a dig out port on the property to be acquired. Transnet submitted that this port will provide the required capacity to meet the expected demand on the strategic Gauteng-Durban corridor.
ACSA’s rationale for the proposed transaction is that the airport previously operated by ACSA at the property has been closed and replaced by the new King Shaka International Airport in Durban.
Competition analysis
The Commission found that the proposed transaction results in an overlap in the market for rentable industrial property within the Durban node and environs. The post-merger market share of Transnet in this market will be less than 10%. At the hearing Transnet further confirmed that it plans to use the property to be acquired primarily for a planned dig out port, which further diminishes any horizontal concerns that may arise from the proposed deal.1 We therefore conclude that the proposed transaction is unlikely to result in a substantial prevention or lessening of competition in any relevant market.
Public interest
The merging parties confirmed that there will be no job losses arising as a consequence of this merger.2
Furthermore, no other public interest concerns arise from this transaction.
Third party concern
We note the concerns raised by Business Zone 759 CC t/a BZ International Gaz (BZ), which indicated that it had also made an
offer to ACSA for the purchase of certain portions of the property located at the former Durban International Airport. The Commission
however concluded that BZ’s concerns are purely commercial and therefore not relevant to the competition and public interest issues as defined in the Competition Act, 1998 (Act No. 89 of 1998, as amended).3 We stress that the proposed deal raises neither competition nor public interest concerns.
CONCLUSION
Having regard to the facts stated above, the Tribunal concludes that the proposed merger is unlikely to lead to a substantial prevention or lessening of competition in any relevant market. The merger also does not raise any public interest concerns. Consequently the proposed transaction is approved unconditionally.
____ 16 April 2012
Andreas Wessels DATE
M Mokuena and T Madima concurring
Tribunal researcher: Londiwe Senona
For the merging parties: Webber Wentzel for the Acquiring Firm
Werksmans for the Target Firm
For the Commission: Dineo Mashego
1Transcript, page 3.
2Merger record, pages 25, 33, 56 and 81.
3See Commission’s report, pages 4 and 14.
3
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