The land, held by the AECI group and the property development business of Heartland Properties, was approved on condition that the Chinese investor reduces the restraint of trade period on the seller from 10 years to five years.
“In its investigation, the commission found that the agreement between AECI and Zendai contained a restraint of trade clause in terms of which AECI undertook not to engage in the business of property development in the Modderfontein area,” the commission said.
“From a competition law perspective, a restraint of trade may often amount to prohibited practice of market allocation in contravention of the act. The commission is 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.”
Shanghai Zendai plans to transform the 1,600 hectares of prime property into a capital city for Africa. The development is expected to take fifteen years to complete and will consist of seven key industries ranging from business to arts and culture.
“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,” it said.
“The commission advised the parties that it lacked jurisdiction over the concerns raised and that these could be best addressed by other government agencies. The complainants were advised to lodge these concerns with the respective agencies.”
The investigation also found that the acquisition would not result in retrenchments as the land was bought as a going concern.