Vukile Property Fund Limited v SA Retail Properties (Proprietary) Limited ; In respect of the enterprise known as Pinecrest Centre (LM256Mar16) [2016] ZACT 42 (11 May 2016)
- Citation
- [2016] ZACT 42
- Status
- Judgment
- Jurisdiction
- South Africa
- Court
- Competition Tribunal
- Panel
- Andreas Wessels, Medi Mokuena, Andiswa Ndoni
- Case number
- LM256Mar16
More details
- Court
- Competition Tribunal
- Panel
- Andreas Wessels, Medi Mokuena, Andiswa Ndoni
- Case number
- LM256Mar16
On this page
Professional case brief
Research organized from the available case record
01
Holding and result
The Tribunal found that there is no horizontal overlap between the target property and Vukile's existing properties in KwaZulu-Natal. Vertically, although Vukile has property management capabilities, Broll Properties Group will continue to manage Pinecrest Centre post-merger, eliminating vertical concerns. The Commission concluded, and the Tribunal concurred, that the transaction is unlikely to substantially prevent or lessen competition in any relevant market. Furthermore, the merging parties confirmed that there would be no adverse impact on employment or other public interest concerns. Accordingly, the Tribunal approved the transaction unconditionally.
Court disposition
The proposed transaction is approved unconditionally.
Orders
- The merger between Vukile Property Fund Limited and SA Retail Properties (Proprietary) Limited in respect of Pinecrest Centre is approved without conditions.
02
Material facts
Parties
Vukile Property Fund Limited
Applicant Counsel: Albert AukemaSA Retail Properties (Proprietary) Limited
Respondent03
Procedural history
Posture
Merger Approval / Final Determination
04
Questions and positions
Legal issues
- 01
Whether the proposed acquisition by Vukile Property Fund Limited of an undivided half share in Pinecrest Centre will substantially prevent or lessen competition in any relevant market.
- 02
Whether the transaction raises any significant public interest concerns, including adverse impact on employment.
Party arguments
- Applicant
- Vukile Property Fund Limited argued that the acquisition would result in sole control over Pinecrest Centre, a minor regional centre in Pinetown, KwaZulu-Natal. The applicant asserted that there is no horizontal overlap with its existing properties in the province and that the transaction would not adversely affect competition or public interest. The property is well located and expected to have increased future trading.
- Respondent
- SA Retail Properties (Proprietary) Limited sought to dispose of its undivided half share in Pinecrest Centre. The respondent confirmed that the transaction would not result in any adverse impact on employment and that property management would remain with Broll Properties Group post-merger, mitigating any vertical competition concerns.
05
Court’s reasoning
Legal principles
- 01
Competition Act 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 89 of 1998
Public interest considerations, including impact on employment, must be assessed in merger proceedings.
06
Ratio, limits and disposition
Ratio decidendi
The Tribunal found that there is no horizontal overlap between the target property and Vukile's existing properties in KwaZulu-Natal. Vertically, although Vukile has property management capabilities, Broll Properties Group will continue to manage Pinecrest Centre post-merger, eliminating vertical concerns. The Commission concluded, and the Tribunal concurred, that the transaction is unlikely to substantially prevent or lessen competition in any relevant market. Furthermore, the merging parties confirmed that there would be no adverse impact on employment or other public interest concerns. Accordingly, the Tribunal approved the transaction unconditionally.
Obiter and limits
- The Tribunal noted the importance of maintaining continuity in property management to avoid vertical competition concerns.
- The transaction demonstrates the application of merger control principles where no substantial competition or public interest issues arise.
Court disposition
The proposed transaction is approved unconditionally.
- The merger between Vukile Property Fund Limited and SA Retail Properties (Proprietary) Limited in respect of Pinecrest Centre 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: LM256Mar16
In the matter between:
VUKILE
PROPERTY FUND
LIMITED
Primary Acquiring Firm
and
SA RETAIL PROPERTIES (PROPRIETARY) LIMITED Primary
Target Firm
IN
RESPECT OF THE ENTERPRISE KNOWN AS
PINECREST
CENTRE
Panel
: Andreas Wessels (Presiding Member)
: Medi Mokuena (Tribunal Member)
: Andiswa Ndoni (Tribunal Member)
Heard on :
13 April 2016
Order Issued on : 13 April 2016
Reasons Issued on : 11 May 2016
Reasons for Decision
Approval
[1] On 13 April 2016, the Competition Tribunal ("Tribunal") approved the proposed transaction between Vukile Property Fund Limited and SA Retail Properties (Proprietary) Limited in respect of the enterprise known as Pinecrest Centre.
[2] The reasons for approving the proposed transaction follow.
Parties to proposed transaction
Primary acquiring firm
[3] The primary acquiring firm is Vukile Property Fund Limited ("Vukile"), a public company registered in accordance with
the laws of the Republic of South Africa.
[4] Vukile is a property fund, which is listed on the Johannesburg Securities Exchange (JSE). Vukile's property portfolio comprises of retail and office space as well as land under development.
[5] Relevant to the current competition analysis is Vukile's retail properties in the KwaZulu-Natal Province.
Primary target firm
[6] The primary target firm is SA Retail Properties (Proprietary) Limited ("SA Retail Properties") in respect of an undivided half share of the enterprise known as Pinecrest Centre (hereinafter referred to as "the target property").
[7] Pre-merger Vukile owns an undivided half share in the target property.
[8] Pinecrest Centre is classified as a minor regional centre and is located in Pinetown in KwaZulu-Natal.
Proposed transaction and rationale
[9] Vukile intends to acquire an interest equivalent to an undivided half share of the target property which will give Vukile sole control over the target property post transaction.
[10] Vukile considers the target property as well located with anticipated increased future trading.
[11] SA Retail Properties wishes to dispose of the target property.
Impact on competition
[12] The Commission found that there is no horizontal overlap between the target property and the properties owned by Vukile in KwaZulu-Natal.
[13] From a vertical perspective, the Commission noted that the target property is currently managed by Broll Properties Group Ply Ltd ("Broll") and that Vukile has capabilities to render property management services. The merging parties however confirmed
that Broll will continue to manage the target property post-merger. The Commission thus concluded that the proposed transaction raises no significant vertical concerns.
[14] Given the above, the Commission concluded that the proposed transaction is unlikely to substantially prevent or lessen competition in any relevant market. We concur with this finding.
Public interest
[15] The merging parties confirmed that the proposed transaction will not result in any adverse impact on employment. [1] The proposed transaction further raises no other public interest concerns.
Conclusion
[16] 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
11 May 2016
DATE
______
Mr Andreas Wessels
Ms Medi Mokuena and Ms Andiswa Ndoni concurring
Tribunal Researcher: Busisiwe Masina
For the merging parties: Albert Aukema of Cliffe Dekker Hofmeyr
For the Commission: Maanda Lambani
[1] Merger record, pages 8 and 50.
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