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Government loses Walmart appeal bid

Mar 09 2012 10:39
Sapa & Reuters

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Johannesburg - The Competition Appeal Court dismissed an application on Friday by three ministers who sought to review and set aside the Competition Tribunal's approval of  Walmart's R16.5bn takeover of Massmart Holdings [JSE:MSM].

The court ruled against the government’s appeal to have the deal set aside, but partially upheld a separate union appeal and said about 500 previously fired workers must be reinstated.

The ruling is likely to be seen as a victory for Walmart in its plans to expand in fast-growing Africa. It is also likely to soothe local investors, who had feared the ruling would tarnish South Africa’s reputation as a business-friendly country.

The court held in favour of the SA Commercial, Catering and Allied Workers' Union (Saccawu) that 503 workers who had been retrenched were entitled to reinstatement.

The court ordered that a study should be commissioned by three experts - representing Saccawu, the ministers of economic development, trade and industry and agriculture, forestry and fisheries - and the merging parties.

The three experts must be appointed within one month of the order, and will then have a further two months to produce a report for the consideration of the court.

It must look into the best means by which South African small and medium suppliers could participate in Walmart's global value chain and thereby ensure that benefits from the merger will flow to this important sector of the economy.

South Africa’s anti-trust regulator in May approved Walmart’s bid for 51% of discounter Massmart Holdings with token conditions. That prompted the government and the main service workers union SACCAWU to launch separate appeals.

Procedural issues

The state’s appeal centred on procedural issues during the May hearing, such as government access to Wal-Mart documents and an alleged lack of time for cross-examination.

“Neither of these arguments justified the setting aside of the Tribunal decision,” the court said in its statement on Friday.

It did rule that 503 previously fired workers should be reinstated and that the union, the government and the merging companies should set up a study on how to ensure that smaller companies can participate in Walmart’s supply chain.

The court also rejected proposals that Walmart should be forced to meet targets on local procurement.

“We are pleased that the Competition Appeal Court has recognised the public interest issues which were raised by our government,” Saleem Mowzer, special advisor to Economic Development Minister Ebrahim Patel, said after the ruling.

A handful of Saccawu members picketed outside the court where they did the “toyi toyi” dance.

“I think this is something we can welcome on the question of conditions,” Saccawu  spokesman Mike Abrahams told reporters. “The judgment says they are not satisfied with the conditions that the Tribunal has agreed upon.”

A Massmart spokesman said the company welcomed the decision.

massmart  |  walmart  |  competition commission  |  retail



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