Automated Summary
Key Facts
The Competition Tribunal of South Africa approved a merger between Fortress Income Fund Limited and Lodestone Reit Limited on 10 November 2016. Fortress, a public company listed on the Johannesburg Securities Exchange, acquires Lodestone's entire issued share capital, gaining sole control. Both firms operate in property markets across multiple provinces, with overlapping geographic nodes in light industrial and retail convenience centers. The Commission found the merged entity's post-transaction market shares (15.88% in one Limpopo node, below 6.5% elsewhere) and accretions (5.05% in the outlier node) do not create competition concerns. The merger was approved without conditions due to strong competitor presence and low market dominance.
Issues
The Competition Tribunal assessed whether the proposed merger between Fortress Income Fund Limited and Lodestone Reit Limited would create competition concerns. The Commission identified overlapping geographic nodes in the markets for retail space in convenience centres and light industrial property. In most nodes, post-merger market shares remained below 6.5% (retail) and 23% (industrial), with accretions under 5% and 3% respectively. Only one node in Limpopo (Makhado Square) exceeded 15.88% market share with 5.05% accretion, but the tribunal concluded that the merged entity's market position would not allow it to prevent or lessen competition due to the presence of strong competitors. The merger was approved without conditions as no significant competition or public interest concerns were identified.
Holdings
- The Competition Tribunal approved the merger between Fortress Income Fund Limited and Lodestone Reit Limited on 10 November 2016, finding that the transaction does not raise competition or public interest concerns.
- The proposed transaction was concluded to not raise any public interest concerns, as outlined in the reasons issued on 7 December 2016.
- The tribunal determined that the merged entity's market shares in relevant geographic nodes (15.88% in one retail node and 23% in light industrial nodes) do not exceed thresholds to significantly reduce competition, supported by the presence of strong competitors in all markets.
Remedies
The Competition Tribunal approved the merger between Fortress Income Fund Limited and Lodestone Reit Limited without imposing any conditions, as the transaction does not raise competition or public interest concerns.
Legal Principles
Other
Judge Name
- Yasmin Carrim
- Medi Mokuena
- Norman Manoim
Passage Text
- [1] On 10 November 2016, the Competition Tribunal approved a large merger between Fortress Income Fund Limited ("Fortress") and Lodestone Reit Limited ("Lodestone").
- [15] Accordingly, the transaction was approved without conditions.
- [12] The proposed merger thus does not create any competition concerns.