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Walmart: State's appeal unsubstantiated

Oct 20 2011 14:25
Cape Town - An appeal for a review of the merger between United States retail giant Walmart and local company Massmart Holdings [JSE:MSM] is "factually insupportable" and "legally misconceived", the Competition Appeal Court heard on Thursday.

The submission was made in the heads of argument of the merged firm's counsel, who include Jeremy Gauntlett and David Unterhalter.

The appeal started in the Cape High Court on Thursday and was brought by the departments of agriculture, forestry and fisheries; economic development; and trade and industry.

They want the review and setting aside of various decisions by the Competition Tribunal, which has allowed the merger subject to certain conditions.

Wim Trengove is arguing on behalf of the four departments.

In its submission, the merged firm said it had never seriously been contended that the merger gave rise to competition concerns. The merger was therefore not likely to substantially prevent or lessen competition in any relevant market.

The firm argued the merger would result in significant pro-competitive and consumer welfare benefits in the form of significantly lower prices. It intends expanding its operations and creating jobs in South Africa.

"Even if job losses were to occur through domestic manufacture displacement or consolidation in the retail sector, these will be dwarfed by the positive effect that the significant consumer gains associated with the merger would have on jobs, not only with Massmart but with the broader economy as well," the merged company said in its submission.

The appeal is being heard by a panel of three judges, headed by Judge Dennis Davis.

The appeal is expected to last two days, but Monday has also been set aside in case the hearing extends longer than expected.

Threat to jobs

The government departments, which filed their heads of argument earlier this month, argue that Walmart's acquisition of Massmart could have a "potentially devastating" effect on local jobs.

They want the transaction to be sent back to the Competition Tribunal for proper consideration and for more effective conditions to be imposed.

Economic Development Minister Ebrahim Patel raised concerns that tens of thousands of jobs could be lost in the local factories supplying Massmart and other local retailers.

Trade and Industry Minister Rob Davies said there was no evidence that Massmart would create 15 000 jobs because of the merger, as it had advertised.

Agriculture Minister Tina Joemat-Pettersson said the implications of a displacement of local suppliers by Massmart would result in lost income and most likely the loss of jobs.

Dozens of anti-Walmart protesters sang "I'm a Communist" and "Awulethu' Mshini Wami" (Bring me my Machine Gun) outside the Cape High Court as the hearing got underway.

"Walmart is going to cost us thousands of jobs. We can't allow them to come in," said one of the protesters, wearing a "Coalition Against Walmart" T-shirt.



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