Urban Impact Properties Limited v Pulse Student Lifestyle (Pty) Ltd (LM099Jun18) [2018] ZACT 50 (24 August 2018)
- Citation
- [2018] ZACT 50
- Status
- Judgment
- Jurisdiction
- South Africa
- Court
- Competition Tribunal
- Panel
- Yasmin Carrim, Imraan Valodia, Andiswa Ndoni
- Case number
- LM099Jun18
More details
- Court
- Competition Tribunal
- Panel
- Yasmin Carrim, Imraan Valodia, Andiswa Ndoni
- Case number
- LM099Jun18
On this page
Professional case brief
Research organized from the available case record
01
Holding and result
The Tribunal found that the post-merger entity would hold market shares below 5% in the relevant markets for rentable student accommodation in Pretoria and residential accommodation in Johannesburg, facing strong competition from other providers. In Cape Town, the properties of the merging parties are not actual competitors due to their distance and differing customer bases. No negative employment effects or other public interest concerns were identified. Therefore, the merger is unlikely to substantially prevent or lessen competition or raise public interest issues, and unconditional approval is warranted.
Court disposition
The merger is approved unconditionally.
Orders
- The large merger between Urban Impact Properties Limited and Pulse Student Lifestyle (Pty) Ltd is approved without conditions.
02
Material facts
Parties
Urban Impact Properties Limited
Applicant Counsel: Jason Van DijkPulse Student Lifestyle (Pty) Ltd
RespondentAmounts and remedies
- Estimated Post Merger Market Share in Pretoria Student Accommodation: ZAR 5
- Estimated Post Merger Market Share in Johannesburg Residential Accommodation: ZAR 5
03
Procedural history
Posture
Merger Control / Approval of Large Merger
04
Questions and positions
Legal issues
- 01
Whether the proposed merger will substantially prevent or lessen competition in any relevant market.
- 02
Whether the merger raises any public interest concerns, including employment effects.
Party arguments
- Applicant
- Urban Impact Properties Limited argued that acquiring Pulse Student Lifestyle (Pty) Ltd would allow it to expand its asset base with well-priced, income-generating properties. The applicant asserted that the transaction would not negatively affect competition or employment, as the properties involved target different customer groups and are geographically separated.
- Respondent
- Pulse Student Lifestyle (Pty) Ltd, through its parent Pulse Urban Properties (Pty) Ltd, submitted that it wished to dispose of the assets to a well-established company with the expertise and resources to manage them. The respondent agreed that the transaction would not result in job losses or adverse public interest effects.
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, including employment effects, must be assessed in merger proceedings.
06
Ratio, limits and disposition
Ratio decidendi
The Tribunal found that the post-merger entity would hold market shares below 5% in the relevant markets for rentable student accommodation in Pretoria and residential accommodation in Johannesburg, facing strong competition from other providers. In Cape Town, the properties of the merging parties are not actual competitors due to their distance and differing customer bases. No negative employment effects or other public interest concerns were identified. Therefore, the merger is unlikely to substantially prevent or lessen competition or raise public interest issues, and unconditional approval is warranted.
Obiter and limits
- The Tribunal noted that the merging parties' properties in Cape Town are situated more than 8km apart and target different customer groups, further reducing any competitive concerns.
- No evidence was presented to suggest that the merger would result in job losses or other adverse public interest effects.
Court disposition
The merger is approved unconditionally.
- The large merger between Urban Impact Properties Limited and Pulse Student Lifestyle (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: LM099Jun18
In the matter between
Urban Impact Properties Limited
Primary Acquiring Firm
And
Pulse Student Lifestyle (Pty) Ltd
Primary Target Firm
Panel
: Ms Yasmin Carrim (Presiding Member)
: Prof lmraan Valodia (Tribunal Member)
: Ms Andiswa Ndoni (Tribunal Member)
Heard on : 15 August 2018
Order Issued on : 15 August 2018 Reasons Issued on : 24 August 2018
REASONS
FOR DECISION
Approval
[1] On 15 August 2018, the Competition Tribunal (“the Tribunal”) unconditionally approved the large merger between Urban Impact Properties Limited ("UIP") and Pulse Student Lifestyle (Pty) Ltd ("PSL").
[2] The reasons for the approval follow.
Parties to the transaction and their activities
[3] The primary acquiring firm is UIP, a property and investment holding company, with a focus on rental properties for both residential and student accommodation. UIP is wholly owned by the Housing Impact Fund South Africa ("HIFSA"), a trust that finances the construction of housing in urban and underdeveloped areas. HIFSA is ultimately owned by Old Mutual Group Holdings (SA) (Pty) Ltd ("OMSA"), an investment holding company for a large number of subsidiaries whose activities span various markets, including property investment and development. UIP, its subsidiaries and controllers are hereafter referred to as the Acquiring Group.
[4] The primary target firm is PSL, a firm that existed as a shelf-company prior to the proposed transaction, with its entire share capital held by Pulse Urban Properties (Pty) Ltd ("PUP"). PUP is active in the property development and investment holding markets, with its primary focus on affordable residential and student accommodation. PUP is ultimately owned and controlled by True Group Investment Holdings.
[5] As part of the proposed transaction, PUP will transfer 17 new and established student and residential properties to PSL which thereafter constituted its property portfolio.
Proposed transaction and rationale
[6] In terms of the proposed transaction, UIP intends to acquire 100% of the issued shareholding in PSL from PUP.
[7] UIP stated that the rationale for the proposed transaction was to grow its asset base with well-priced, income generating properties,
whereas PSL wished to dispose of the assets to a well-established company with the necessary expertise and resources to run them.
Relevant market and impact on competition
[8] In investigating the proposed transaction, the Competition Commission ("Commission") found that the Acquiring Group holds a number of investment properties, leading to horizontal overlaps in the following markets:
i. Provision of rentable student accommodation in Pretoria
ii. Provision of rentable residential accommodation in Johannesburg
iii. Provision of rentable residential accommodation in Cape Town
[9] In the markets for rentable student accommodation in Pretoria and rentable residential accommodation in Johannesburg, the post-merger
entity will hold estimated market shares of below 5% in both areas and continue to face strong competition from other available
properties.
[10] In the market for the provision of rentable residential accommodation in Cape Town, the Commission found that the merging parties' respective properties are not actual competitors. This is because they are situated more than 8km away from one another and, due to price differences, target different customer groups. We are accordingly satisfied that the proposed transaction is unlikely to result in a significant lessening of competition in any of the relevant markets.
Public interest
[11] The merging parties submitted that the proposed transaction will have no negative effect on employment. The Commission was satisfied that there is unlikely to be any job losses arising out of this merger as the firms will continue to operate as is post-merger.
[12] The proposed transaction further raised no other public interest concerns.
Conclusion
[13] In light of the above, we conclude that the proposed transaction is unlikely to substantially prevent or lessen competition in any relevant market. In addition, no public interest issues arise from the proposed transaction. Accordingly, we approve the proposed transaction unconditionally.
Ms Yasmin Carrim
Ms Andiswa Ndoni and Prof lmraan Valodia
24 August 2018
Date
Tribunal Researcher:
Jonathan Thomson
For the merging parties: Jason Van Dijk of Norton Rose Fulbright
For the Commission:
Nolubalalo Myoli and Ratshidaho Maphwanya
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