Competition Authority blocks P20m Maun mall deal

Mbongeni Mguni | Friday January 29, 2021 17:01

Coming up: Delta Palms Hills will be located in central Maun. The CCA says the mallu00e2u20acu2122s cross-ownership is another reason to reject NAPu00e2u20acu2122s application PIC: DELTAPALMS.COM

The deal, which would have given NAP a stronger foothold in the tourism village, was scuppered after the CCA said the transaction raised 'competition issues' as NAP already has a robust retail presence in Maun.

NAP has 57 retail and industrial properties in Botswana last valued at about P1.4 billion and spread out from Gaborone to Kasane, Maun and Gantsi, Jwaneng and other parts of the country. The property investment group’s assets include well-known properties such as Riverwalk Mall and Kagiso Centre in Gaborone, Mafenyatlala Mall in Molepolole and Mokoro Centre in Maun.

In its 2020 Annual Report, NAP directors had told shareholders that the group had entered into an agreement with El Alamein Pty Ltd for the purchase of Tribal Lot 1299 in Maun, which is a 'well-located retail centre' currently collecting rentals under several leases with tenants. In a recent ruling, the CCA said its assessment of the proposed deal had shown that competition concerns would arise in the rental retail space in Maun should NAP be allowed to conclude its transaction.

“The proposed transaction is likely to result in a substantial lessening of competition, due to the removal of a competitor in the form of the target enterprise,” the CCA’s acting CEO, Baitshepi Tebogo said in a statement. “The implementation of the proposed merger is expected to result in the acquiring entity enhancing its dominant position.

“The post-merger market shares in the relevant geographic area are considerably higher than the 25% dominance threshold prescribed by the Competition Act, which raises potential competition concerns.”

The competition watchdog noted that there were high barriers to entry in Maun owing to the difficulty in acquiring commercial land in the relevant market. Also, the assessment found cross-shareholding between an upcoming retail centre in Maun called Delta Palms Mall and NAP. The cross-shareholding is through a common shareholder called Cash Bazaar Holdings, which holds 19.9% equity in NAP.

“This cross-shareholding element has the potential to give rise to both coordinated and unilateral effects to the detriment of consumers and competitors of the merged enterprise,” Tebogo said. As at press time, it was unclear whether the NAP would appeal the CCA’s decision.