By Liad Hadar, Director at Hadar Incorporated, Specialist Property Law Firm
This article first appeared in Asset Magazine’s April 2024 edition

I recently had the great privilege of assisting clients in a disposal/acquisition of a property asset for R140 million. As a result, my team and I assisted in preparing the required submission to the Competition Commission for approval of the transaction, all of which coincided with our firm launching its dedicated Competition Law department.

I thought it would be helpful to explain the circumstances in which property owners (sellers and purchasers) must make submissions to the Competition Commission for approval before such transactions can proceed as well as the motives for us launching this vertical to our Property Law specialist offering.

The Competition Commission

The Competition Commission gets involved in a property transaction when it meets certain criteria, particularly if the transaction exceeds a certain value threshold and raises concerns about competition within the property market.

Thresholds:

The Competition Commission must be notified of all transactions if the value of the proposed merger equals or exceeds R600 million (calculated by either combining the annual turnover of both parties to the transaction or their assets) and the annual turnover or asset value of the target property (or the property owning entity, if it is the subject of the transaction) is at least R100 million.

If the property transaction exceeds the current threshold of R100 million, the transaction is considered an “intermediate or large merger and acquisition” by the Competition Commission and requires a formal notification and an application process for “merger clearance.”

Competition Concerns:

The Competition Commission examines whether the proposed property transaction might harm competition in the property market resulting from the transaction in question.

For example, if the transaction involves two major property funds merging, it could potentially reduce competition in the property sector, leading to higher prices or fewer choices for consumers.

Notification and Review:

If the property transaction falls within the above thresholds, the parties involved are typically required to submit a formal notification to the Competition Commission. The Commission then conducts a thorough review to assess the potential impact on competition in the property market.

Merger Clearance:

After reviewing the transaction, the Competition Commission may grant “merger clearance” if it determines that the transaction is unlikely to substantially prevent or lessen competition in the property market. However, if the Commission finds that the transaction could harm competition, it may impose conditions on the merger or, in the very extreme example, even prohibit it altogether.

All Your Legal Property Needs in a Single, Specialist Firm

It had been a long-term dream of mine to build an end-to-end specialist Property Law firm, capable of swiftly and expertly resolving our discerning clients’ needs. The addition of Competition Law expertise to our stable of services is a key step towards realizing this dream.

Our clients are involved in some of South Africa’s largest property transactions and require a specialist partner who can manage their full suite of legal property needs.

Given our vast experience in handling some of South Africa’s most significant property transactions, we recognized the necessity for specialized legal expertise in navigating the intricate landscape of Competition Law and the need to provide clients with tailored solutions to their diverse legal needs.

Our new department offers a range of specialized services, including the management of Competition Commission notifications and submissions for eligible property transactions exceeding the R100 million threshold.

These services encompass a comprehensive legal analysis of the proposed transaction against the Commission’s thresholds, preparation of required documentation, and formal submission for merger clearance.

We’re privileged to regularly serve clients involved in property transactions of this magnitude. By merging our expertise in property and Competition Law, we’re perfectly placed to expedite Competition Commission merger clearances, and bring our clients’ deals to successful conclusions.

As always, I encourage you to contact us for any questions or advice that you may require, now including a transaction that requires Competition Law services.