The 10 years restraint of trade agreement in the R1bn sale of the Modderfontein land from AECI Group to Chinese investor Shanghai Zendai Property Limited (Zendai) was too long and unjustified, said the Competition Commission.
As such the Commission has demanded that the restraint of trade agreement be reduced from 10 years to 5 years. The Commission placed this demand as a condition to approving the AECI/Zendai deal which will see 1600 hectares of vacant land transfer to the Chinese investor. Zendai, Hong Kong listed property specialist is planning to roll out a R77 billion development in the land.
The Commission announced yesterday that it has approved the deal with that one condition. Other concerns raised by stakeholders were set side. These include a complain that potential enviromental polution, sale of a large piece of land to a foreign entity and lack of social housing in the development plan.
The Commission said it has advised the complainants that it lacked jurisdiction over the concerns raised and that these could be best addressed by other government agencies.
The Commission said it was of the view that the 10 year restraint period was too long, unjustified and likely to frustrate potential re-entry by the seller in the Modderfontein area.
“The acquired land consists of 1600 hectares of vacant land, partially developed land and leased structures. It also consists of purpose build structures built by the current lessee. The vacant land is zoned as mixed use properties, specifically as industrial, retail office, commercial and residential space.”
Concerns were raised by market participants relating to environmental pollution, the sale of land to a foreign company and that the agreement between the firms does not allow the construction of social housing, which undermines the government’s development policy of community integration of communities regardless of financial status.”
The Commission’s investigation found that the acquisition by the Chinese investor will also not result in retrenchments as the land is bought as a going concern. The investor also undertook not to retrench any employees and not to change the terms of conditions of employment.