Old Mutual And Fiar Cape

The judgment

The court's own file

COMPETITION TRIBUNAL OF SOUTH AFRICA Case No: LM1980ct17 In the matter between: Old Mutual Retirement Accommodation Fund (Pty) Ltd Primary Acquiring Firm And Fair Cape Life Right Holdings (Pty) Ltd Primary Target Firm Panel : Norman Manoim (Presiding Member) : Medi Mokuena (Tribunal Member) : Mondo Mazwai (Tribunal Member) Heard on : 22 November 2017 Order Issued on : 22 November 2017 Reasons Issuedon : 15 December 2017 Reasons for Decision Approval 1) On 22 November 2017, the Competition Tribunal (“Tribunal”) unconditionally approved the transaction involving Old Mutual Retirement Accommodation Fund (Pty) Ltd and Fair Cape Life Right Holdings (Pty) Ltd.

[2]The reasons for approving the proposed transaction follows. Parties to the proposed transaction Primary acquiring firm i) (4) {5} The primary acquiring firm is Old Mutual Retirement Accommodation Fund (Pty) Ltd (“OMRAF"), a company incorporated in accordance with the company laws of the Republic of South Africa. OMRAF is a wholly-owned subsidiary of Old Mutual Life Assurance Company Limited (“OMLASCSA") which is ultimately controlled by Old Mutual Plc. OMRAF is an investment fund that focuses on the growing need for retirement accommodation by investing in new developments and funding existing retirement housing projects in South Africa. OMRAF focuses on life right, ‘sectional title, freehold and rental investments. OMRAF and its controllers are hereinafter collectively referred to as the Acquiring Group. Primary target firms (6) 18] The primary target firm is Fair Cape Life Right Holdings (Pty) Ltd ("FLRH"), a private company incorporated in accordance with the company laws of the Republic of South Africa. FLRH is owned and controlled by Faircape Retirement Holdings Trust (“Faircape Trust"). FLHR and its controllers are hereinafter collectively referred to as the Target Group. The Target Group owns and operates six (6) retirement accommodation facilities situated in the Western Cape. Proposed transaction and rationale {9] {10} In terms of the Sale of Shares and Claims Agreement, OMRAF intends to acquire 50% of the issued share capital of FLRH and 50% of all amounts owing by FLRH to Faircape Retirement Trust. Post-merger, OMRAF and Faircape Trust will exercise joint control over FLRH. The Acquiring Group submits that the purchase of FLRH is aligned with its objective of optimizing risk-and return and building a long-term asset base of retirement accommodation. The Target Group submits that it has entered into the proposed transaction in orderto become aligned with the Old Mutual Group and benefit from Old Mutual's brand reputation in the financial sector. Impact on competition

[11]112)

[13]The Commission considered the activities of the merging parties and found that the proposed transaction presents a horizontal overlap as the merging parties are engaged in the provision of retirement accommodation in the Western Cape through various business models.’ Furthermore, the Commission found that the merged entity will have a market share of less than 6% and that the merging parties will continue to face competition from its market counterparts such as Helderberg Villages, Cape Peninsula Organisation for the Aged (CPOA) and Devmark Property. As such the Commission submitted that the proposed merger is unlikely to lessen or prevent competition in the relevant market and recommended that the proposed merger be approved without conditions We concur with the Commission's findings. * The proposed transaction is assessed in the Western Public interest

[14]The merging parties confirmed that the proposed transaction will not have any negative effect on employment in South Africa.

[15]_ 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. 15 December 2017 DATE Mrs Medi Mokuena and Ms Mondo Mazwai concurring Tribunal Case Manager: Ms Busisiwe Masina For the merging parties: Ms Suzane Meyer For the Commission : Ms Nonhlanhla Msiza