1 June 2011
South Africa’s Competition Tribunal has given US retail giant Walmart the go-ahead for its R16.5-billion acquisition of a controlling stake in local retailer Massmart, with conditions.
“Today the Competition Tribunal approved the merger between Walmart and Massmart subject to certain conditions,” the tribunal said in a statement on Tuesday.
No further details were given. Full reasons for the tribunal’s decision will be made public within 20 working days.
In January, shareholders voted to accept Walmart’s bid to acquire 51 percent of Massmart for R148 a share in a deal worth around R16.5-billion.
The Competition Commission initially recommended the deal go ahead without conditions. However, it later changed its mind based on new evidence and recommended that Massmart reinstate 503 retrenched workers and the new merged entity be forced to honour existing agreements with trade unions for the next three years.
Earlier in May, the tribunal held hearings in Pretoria during which trade unionists and government departments argued that jobs and local procurement in South Africa could be jeopardised by the deal.
Unionists argued that Walmart was known to be anti-union and hard on labour.
Unions and government wanted the tribunal to either decline permission for the deal to go ahead, or alternatively impose enforceable conditions on Walmart.
However, Walmart argued that imposing conditions would violate numerous international trade agreements signed by the South African government. It would also give an unfair advantage to the merged entities’ competitors.
Walmart said it was prepared to commit to no retrenchments for two years, and that the merged entity would honour all labour agreements to which Massmart was a party.
Massmart and Walmart also vowed to spend R100-million to develop local South African suppliers over the next three years.
Government said it was concerned about Walmart’s procurement policies. It argued if Walmart were a country, it would be China’s eighth largest trading partner.
Walmart’s belief in low prices governed its procurement policies and that there was a substantial public interest in the deal and its effects, according to the government.
The Massmart group includes Game, Dion Wired, Makro, Builders Warehouse and Masscash.
Walmart operates around the world, including Canada, Brazil, China, Chile, Japan and Mexico. It wants to buy the stake in Massmart in order to get a stake in emerging African markets.
Sapa
