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COMPETITION TRIBUNAL OF SOUTH AFRICA

Case No: 41/LM/MAY11

In the matter between:

REDEFINE PROPERTIES LTD …........................................................Acquiring Firm

And

ROWMOOR INVESTMENTS 567 (PTY) LTD …...........................................Target Firm

IN RESPECT OF THE PROPERTY LETTING

ENTERPRISE KNOWN AS “SAMMY MARKS PORTION 2”

Panel : Norman Manoim (Presiding Member) Yasmin Carrim (Tribunal Member)

Andreas Wessels (Tribunal Member)

Heard on : 06 July 2011

Order issued on : 06 July 2011

Reasons issued on : 11 July 2011

Reasons for Decision

Approval

1. On 06 July 2011, the Competition Tribunal (“Tribunal”) approved the transaction involving Redefine Properties Ltd and Rowmoor Investments 567 (Pty) Ltd in respect of the property letting enterprise known as “Sammy Marks Portion 2”. We explain below our reasons for this conclusion.

Parties to the transaction

2. The primary acquiring firm is Redefine Properties Ltd (“Redefine”), a public company incorporated in accordance with the laws of the Republic of South Africa. Redefine is not controlled by any single shareholder. It controls in excess of nineteen subsidiaries.

3. The primary target firm is the property letting enterprise known as “Sammy Marks Portion 2” owned by Rowmoor Investments 567 (Pty) Ltd (“Rowmoor”). Rowmoor is incorporated in accordance with the laws of the Republic of South Africa.

Proposed transaction

4. In terms of the proposed transaction, Redefine intends to acquire from Rowmoor the property letting enterprise known as “Sammy Marks Portion 2”, a rentable retail space. Redefine pre-merger owns portions 1 and 3 of Sammy Marks Square. Pursuant to the proposed transaction Redefine will thus own portions 1, 2 and 3 of Sammy Marks Square, hereinafter collectively referred to as “Sammy Marks Square”.

5. Simultaneously with the above, the parties to the merger have concluded a Sale of Shares Agreement in terms of which Redefine will purchase all the shares held by Rowmoor in Sammy Marks Square Management Company (Pty) Ltd, which pre-merger is jointly controlled by Redefine and Rowmoor. Redefine will perform its own property management of Sammy Marks Square once it acquires sole control of Sammy Marks Square Management Company (Pty) Ltd.

Rationale for transaction

6. Since Redefine pre-merger owns portions 1 and 3 of Sammy Marks Square, it wishes to consolidate its interest in the complex by acquiring portion 2.

7. The proposed deal will allow Rowmoor to consider new investment opportunities.

Merging parties’ activities

8. Redefine is a property loan stock company. Its property investments are diversified across all sectors of the rental property market including rentable retail space, rentable office space and rentable industrial space.

9. As stated above, Sammy Marks Square is a rentable retail space. It is situated in the Pretoria Central Business District (“CBD”).

Competition assessment

10. As is evident from the above, the activities of the merging parties horizontally overlap in regard to rentable retail space in Pretoria.

11. In assessing the market for the provision of rentable retail space, the Competition Commission used the Independent Property Databank’s (IPD) retail property classification of potential subsectors. The IPD classifies various shopping centres, based mainly on gross lettable area (GLA), inter alia as follows:¹

Type of Centre	Property type classification
Super regional	> 100 000 m2
Major regional	50 000 m2 – 100 000 m2
Minor regional	25 000 m2 – 50 000 m2
Community centre	12 000 m2 – 25 000 m2
Neighbourhood centre	5 000 m2 – 12 000 m2
Local convenience centre	1 000 m2 – 5 000 m2

12. Sammy Marks Square portions 1 and 3 are 11 700 m² combined; portion 2 is approximately 17 745 m². Combined, these three portions thus represent >25 000 m² of rentable retail space and therefore is classified as a minor regional centre. According to the merging parties’ submissions, these portions “co-exist as if the centre is a single shopping centre”.²

13. However, the precise scope of the relevant product and geographic markets may be left open in this case since the proposed merger raises no competition concerns in any market delineation context.

14. The Redefine group does not pre-merger own any other minor regional centres within a 15 km radius of Sammy Marks Square.³ If the market is defined more broadly then there is an overlap between the activities of the merging parties since the Redefine group does own other rentable retail space in the Pretoria CBD. The post-merger market share of the merged entity however remains low in any potential relevant market. Therefore, we conclude that the proposed transaction is unlikely to lead to any substantial prevention or lessening of competition in any relevant market.

Public interest

15. The merging parties submitted that no job losses would result from the proposed transaction.⁴ The proposed deal raises no other public interest issues.

Conclusion

16. Based on the above, we conclude that the proposed transaction is unlikely to lead to a substantial prevention or lessening of competition in any relevant market. Furthermore, no public interest concerns arise from this deal. Accordingly the proposed transaction is approved unconditionally.

____________________ 11 July 2011

ANDREAS WESSELS DATE

Norman Manoim and Yasmin Carrim concurring

Tribunal researcher: Tebogo Hlafane

For the merging parties: Vani Chetty Competition Law

For the Commission: Mogalane Matsimela

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