Unilever South Africa (Pty) Ltd v Aconcagua 14 Investments (RF) (Pty) Ltd (LM051May17) [2017] ZACT 16 (27 June 2017)
- Citation
- [2017] ZACT 16
- Status
- Judgment
- Jurisdiction
- South Africa
- Court
- Competition Tribunal
- Panel
- AW Wessels, Mondo Mazwai, lmraan Valodia
- Case number
- LM051May17
More details
- Court
- Competition Tribunal
- Panel
- AW Wessels, Mondo Mazwai, lmraan Valodia
- Case number
- LM051May17
On this page
Professional case brief
Research organized from the available case record
01
Holding and result
The Tribunal found that there is no overlap between the activities of the merging parties, as Aconcagua is not involved in the manufacture, distribution, or marketing of consumer products, and Unilever South Africa does not own any Grade A commercial property in La Lucia or elsewhere in South Africa. The transaction will not affect third parties, as Unilever South Africa has been the sole tenant of the La Lucia Building and will continue to occupy it post-transaction. The merging parties confirmed that the transaction will not negatively affect employment, as the target firm has no employees. No other public interest concerns were identified. Accordingly, the Tribunal concluded that the proposed transaction is unlikely to substantially prevent or lessen competition in any relevant market or raise any adverse public interest issues, and approved the transaction unconditionally.
Court disposition
The proposed transaction is approved unconditionally.
Orders
- The proposed merger between Unilever South Africa (Pty) Ltd and Aconcagua 14 Investments (RF) (Pty) Ltd is approved without conditions.
02
Material facts
Parties
Unilever South Africa (Pty) Ltd
Applicant Counsel: Rosalind LakeAconcagua 14 Investments (RF) (Pty) Ltd
RespondentAmounts and remedies
- Shareholding Acquired: 100
03
Procedural history
Posture
Merger Approval / Final Determination
04
Questions and positions
Legal issues
- 01
Whether the proposed acquisition of Aconcagua 14 Investments (RF) (Pty) Ltd by Unilever South Africa (Pty) Ltd is likely to substantially prevent or lessen competition in any relevant market.
- 02
Whether the transaction raises any adverse public interest concerns.
Party arguments
- Applicant
- Unilever South Africa (Pty) Ltd argued that the acquisition would allow it to own rather than rent the La Lucia Building, which it has exclusively occupied since 2002. The transaction would not affect competition as Aconcagua is solely a property investment firm and does not operate in the consumer goods market. No negative impact on employment or other public interest factors was anticipated.
- Respondent
- Aconcagua 14 Investments (RF) (Pty) Ltd, controlled by MMI Group Limited, supported the transaction as it would enable MMI to realise its investment in Aconcagua and the La Lucia Building. The respondent confirmed that the transaction would not negatively affect employment, as the target firm has no employees, and would not impact third parties.
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 any relevant market.
- 02
Competition Act, No. 89 of 1998
Public interest considerations must be assessed in merger proceedings, including the effect on employment.
06
Ratio, limits and disposition
Ratio decidendi
The Tribunal found that there is no overlap between the activities of the merging parties, as Aconcagua is not involved in the manufacture, distribution, or marketing of consumer products, and Unilever South Africa does not own any Grade A commercial property in La Lucia or elsewhere in South Africa. The transaction will not affect third parties, as Unilever South Africa has been the sole tenant of the La Lucia Building and will continue to occupy it post-transaction. The merging parties confirmed that the transaction will not negatively affect employment, as the target firm has no employees. No other public interest concerns were identified. Accordingly, the Tribunal concluded that the proposed transaction is unlikely to substantially prevent or lessen competition in any relevant market or raise any adverse public interest issues, and approved the transaction unconditionally.
Obiter and limits
- The Tribunal noted that the merging parties provided sufficient evidence that the transaction would not negatively affect employment.
- No third parties will be affected by the transaction, as Unilever South Africa has been the sole tenant of the property since 2002.
Court disposition
The proposed transaction is approved unconditionally.
- The proposed merger between Unilever South Africa (Pty) Ltd and Aconcagua 14 Investments (RF) (Pty) Ltd 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: LM051May17
In the matter between:
Unilever South Africa (Pty) Ltd
Acquiring Firm and
Aconcagua 14 Investments (RF) (Pty) Ltd
Target Firm
Panel
: AW Wessels (Presiding Member)
: Mondo Mazwai (Tribunal Member)
: lmraan Valodia (Tribunal Member)
Heard on
: 14 June 2017
Order Issued on
: 14 June 2017
Reasons Issued on : 27 June 2017
Reasons for Decision
Approval
[1] On 14 June 2017, the Competition Tribunal ("Tribunal") unconditionally approved the proposed transaction between Unilever South Africa (Pty) Ltd ("ULSA") and Aconcagua 14 Investments (RF) (Pty) Ltd ("Aconcagua").
[2] The reasons for approving the proposed transaction follow.
Parties to the Proposed Transaction
Primary Acquiring Firm
[3] The primary acquiring firm is ULSA, a firm incorporated in accordance with the laws of the Republic of South Africa. ULSA forms part of the Unilever Group and is ultimately controlled by Unilever PLC, a firm incorporated in accordance with the laws of the United Kingdom.
[4] The Unilever Group is a global diversified fast-moving consumer goods company. ULSA produces, processes, distributes and markets a number of products including home, personal care and food products.
Primary Target Firm
[5] The primary target firm is Aconcagua, a firm incorporated in accordance with the laws of the Republic of South Africa. Pre-merger Aconcagua is controlled by MMI Group Limited ("MMI"). MMI is controlled by MMI Holdings Limited. Aconcagua does not directly or indirectly control any firm.
[6] Aconcagua is a property investment firm which owns and controls the La Lucia Building located in the La Lucia/Umhlanga area in KwaZulu-Natal. ULSA has been leasing the entire building exclusively since 2002.
Proposed Transaction and Rationale
[7] ULSA intends to acquire 100% of the issued share capital of Aconcagua. Post transaction ULSA will therefore exercise sole control of Aconcagua. ULSA will continue to use the La Lucia Building as its headquarters and registered office.
[8] According to the merging parties, the proposed transaction will inter alia enable ULSA to own rather than rent the La Lucia Building and will enable MMI to realise its investment in Aconcagua and the La Lucia Building.
Impact on Competition
[9] The Competition Commission ("Commission") found that there is no overlap between the activities of the merging parties since Aconcagua is not engaged in the manufacture, distribution and marketing of consumer products and while ULSA does own commercial property for its own use, it does not own any Grade A commercial property in La Lucia or anywhere in South Africa.
[10] Furthermore, the Commission found that no third parties will be affected by the proposed transaction since ULSA has been the sole tenant of the La Lucia Building and will continue to occupy the La Lucia Building post-transaction.
[11] We concur with the Commission's finding that the proposed transaction is unlikely to substantially prevent or lessen competition in any relevant market.
Public Interest
[12] The merging parties confirmed that the proposed transaction will not negatively affect employment since the target firm does not have any employees.[1]
[13] The proposed transaction raises no other public interest concerns.
Conclusion
[14] In light of the above, we conclude that the proposed transaction is unlikely to substantially prevent or lessen competition in any relevant market or raise any adverse public interest issues. Accordingly, we approve the proposed transaction unconditionally.
27 June 2017
DATE
______
Mr AW Wessels
Ms Mondo Mazwai and Prof lmraan Valodia concurring
Tribunal Case Manager: Hayley Lyle
For the merging parties: Rosalind Lake of Norton Rose Fulbright
For the Commission: Zanele Hadebe
[1] Merger Record, pages 10, 46 and 52.
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