GEPF And Menlyn Maine Investment

The judgment

The court's own file

COMPETITION TRIBUNAL OF SOUTH AFRICA Case No.: LM009Apr21 In the matter between: Government Employees Pension FundPrimary Acquiring Firm And Menlyn Maine Investment Holdings (Pty) LtdPrimary Target Firm Mr Enver Daniels (Presiding Member) Prof Imraan Valodia (Tribunal Member) Panel: Dr Thando Vilakazi (Tribunal Member) Heard on:27 July 2021 Order Issued on:27 July 2021 ORDER Further to the recommendation of the Competition Commission in terms of section 14A(1)(b) of the Competition Act, 1998 (“the Act”) the Competition Tribunal orders that– 1. the merger between the abovementioned parties be approved in terms of section 16(2)(a) of the Act; and 2. a Merger Clearance Certificate be issued in terms of Competition Tribunal Rule 35(5)(a). 27 July 2021 Presiding Member Mr Enver Daniels Date Concurring: Prof Imraan Valodia and Dr Thando Vilakazi Date: 27 July 2021 To: Cliffe Dekker Attorneys Case Number: LM009Apr21 Government Employees Pension Fund And Menlyn Maine Investment Holdings (Pty) Ltd You applied to the Competition Commission on 07 April 2021 for merger approval in accordance with Chapter 3 of the Competition Act. Your merger was referred to the Competition Tribunal in terms of section 14A of the Act, or was the subject of a Request for consideration by the Tribunal in terms of section 16(1) of the Act. After reviewing all relevant information, and the recommendation or decision of the Competition Commission, the Competition Tribunal approves the merger in terms of section 16(2) of the Act, for the reasons set out in the Reasons for Decision. This approval is subject to: xno conditions. the conditions listed on the attached sheet. The Competition Tribunal has the authority in terms of section 16(3) of the Competition Act to revoke this approval if a) it was granted on the basis of incorrect information for which a party to the merger was responsible. b) the approval was obtained by deceit. c)a firm concerned has breached an obligation attached to this approval. The Registrar, Competition Tribunal Notice CT 10 About this Notice This form is prescribed by the Minister of Trade and Industry in terms of section 27 (2) of the Competition Act 1998 (Act No. 89 of 1998). Contacting the Tribunal The Competition Tribunal Private Bag X24 Sunnyside Pretoria 0132 Republic of South Africa tel: 27 12 394 3300 fax: 27 12 394 0169 e-mail: ctsa@comptrib.co.za Merger Clearance Certificate This notice is issued in terms of section 16 of the Competition Act. You may appeal against this decision to the Competition Appeal Court within 20 business days. 1 COMPETITION TRIBUNAL OF SOUTH AFRICA Case no: LM009Apr21 Government Employees Pension Fund (Primary Acquiring Firm) and Menlyn Maine Investment Holdings (Pty) Ltd (Primary Target Firm) Heard on: 27 July 2021 Order Issued on: 27 July 2021 REASONS FOR DECISION

[1]On 27 July 2021, the Competition Tribunal unconditionally approved a large merger between the Government Employees Pension Fund (“GEPF”) and Menlyn Maine Investment Holdings (Pty) Ltd (“MMIH”).

[2]GEPF intends to acquire sole control over MMIH’s undivided share of Redevelopment Erf 3 and its share of the rental enterprise known as Central Square, Menlyn Maine ("Target Property").

[3]The GEPF is represented by the Public Investment Corporation SOC Ltd ("PIC") and controlled by its Board of Trustees. The GEPF holds interests in multiple firms, including MMIH. The PIC is controlled by the South African government.

[4]Pre-merger, the shares in MMIH are held by African Spirit Trading 306 (Pty) Ltd, Kgwara Investments (Pty) Ltd, Henk Boogertman, GEPF, and African Spirit Trading 309 (Pty) Ltd.

[5]The GEPF is a defined benefit pension fund that manages and administers pensions and other benefits for government employees in South Africa. The PIC, on behalf of the GEPF, invests in various classes of assets including equities, property and fixed income.

[6]The Target Property comprises of a retail component, a gymnasium, office space, and retail/business premises.

[7]When assessing the merging parties’ activities, the Commission identified a horizontal overlap as the GEPF holds controlling and non-controlling interests in various firms that are active in the property industry, and which compete with the Target Property. This finding raised a concern in relation to potential coordinated effects through information sharing, that may arise as a result of GEPF’s cross shareholding in competing firms.

[8]In assessing the potential coordinated effects of the proposed transaction, the Commission noted that, as a shareholder in multiple firms that compete with the Target Property, the GEPF has the ability to appoint directors in numerous firms in which it holds shares. The Commission highlighted two firms in which the GEPF can appoint 2 directors or has control: SA Corporate Real Estate 1 (in which the GEPF has a non - controlling interest and one director) and Growthpoint 2 (in which the GEPF also has a non - controlling interest and one director).

[9]Because the Target Property competes with Brooklyn Mall, which is controlled by Growthpoint and on whose board the PIC is represented, the Commission considered the extent to which coordinated effects could arise. In addressing this concern, the Commission considered the PIC’s Integrity Walls Policy (“the Policy”), The Commission therefore highlighted the fact that, because the Target Property is unlisted, while Growthpoint is listed, any sensitive information will not be exchanged.

[10]Based on the fact that the Target Property and Growthpoint will be managed in separate divisions, and the the Commission is of the view that there are sufficient measures in place to alleviate any information sharing concerns that might arise as a result of the proposed transaction.

[11]The Commission was therefore of the view that the proposed merger is unlikely to substantially prevent or lessen competition.

[12]The merger raises no public interest concerns.

[13]We concluded that the proposed transaction is unlikely to substantially prevent or lessen competition in any relevant market, or to have a negative impact on public interest. 27 July 2021 Mr Enver Daniels Date Dr Thando Vilakazi and Prof Imraan Valodia concurring. Tribunal Case Manager: Camilla Mathonsi For the Merging Parties: Andries Le Grange and Nelisiwe Khumalo of CDH For the Commission: Thabelo Masithulela and Sewela Moshoma 1 SA Corporate controls Willow Way Shopping Centre which is considered a Neighbourhood Shopping Centre with a GLA of approximately 7 933 square meters and located 5.5km away from the Target Property. However, based on case law, Willow Way Shopping Centre cannot be considered as a competitive constraint due to its size. 2 Growthpoint controls Brooklyn Mall which is located 6.1km away from the Target Property and which is considered a regional shopping centre with a GLA of approximately 81 850 square metres. Reason:Witnessing Enver Daniels Signed by:Enver Daniels Signed at:2021-07-27 16:54:20 +02:00