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Cape Town - There is no evidence a merger between United States retail giant Walmart and local firm Massmart Holdings [JSE:MSM] will change the South African economy, the Competition Appeal Court heard on Friday.
"Nothing in the evidence indicates there is going to be any significant change," said David Unterhalter, counsel for the merged firm.
"South Africa does some things extremely well and where it does so it will prevail. Were it is vulnerable it will remain so."
South Africa, he said, was like the rest of world when it came to manufacturing.
"There are some things we do well and some we don't so well," he said. "In this merger we can not remake the South Africa economy as we think we can."
In an exchange with Rafik Bhana, counsel for the three ministers who want more stringent conditions imposed on the transaction, Judge Denis Davis said South Africa manufacturers often could not respond to demand quickly enough to a rise in demand.
"It is all about ensuring you can marry supply with the demand," he said. "It is not just about them getting volume."
He said that Walmart would not be a threat if South Africa had a serious manufacturing sector. "The issue is surely about a supply chain that works. To perpetuate inefficiencies cannot be in the long-term advantage," Davis said.
Bhana said the approval should have focused on whether the merger benefited local suppliers and job creation.
"Prices do not count for the purpose of the application. There is no reference or place for that as the statute reads there is no place for taking onto account consumer benefits," he said.
The Competition Tribunal ruled on May 31 that Walmart, the world's biggest retailer, could proceed with the deal on condition no jobs were cut for two years and the companies set up a R100 million fund to assist local suppliers.
The government said the conditions were inadequate and would result in a massive influx of imports that would undermine manufacturing output.
Appeal
The appeal against the tribunal's decision was brought by the departments of economic development, trade and industry, and agriculture, forestry, and fisheries -- as well as Saccawu.
Saccawu has filed a separate appeal against the approval of the takeover of Massmart on the grounds that the tribunal failed to take adequate consideration of the public interest.
Walmart paid R16.5bn in June for a 51% stake in Massmart, South Africa's biggest food and general goods wholesaler.
The company said the deal would create 15 000 jobs in South Africa within five years. Most of the R60bn it would spend on buying food and consumer goods would be sourced from local suppliers.
"Nothing in the evidence indicates there is going to be any significant change," said David Unterhalter, counsel for the merged firm.
"South Africa does some things extremely well and where it does so it will prevail. Were it is vulnerable it will remain so."
South Africa, he said, was like the rest of world when it came to manufacturing.
"There are some things we do well and some we don't so well," he said. "In this merger we can not remake the South Africa economy as we think we can."
In an exchange with Rafik Bhana, counsel for the three ministers who want more stringent conditions imposed on the transaction, Judge Denis Davis said South Africa manufacturers often could not respond to demand quickly enough to a rise in demand.
"It is all about ensuring you can marry supply with the demand," he said. "It is not just about them getting volume."
He said that Walmart would not be a threat if South Africa had a serious manufacturing sector. "The issue is surely about a supply chain that works. To perpetuate inefficiencies cannot be in the long-term advantage," Davis said.
Bhana said the approval should have focused on whether the merger benefited local suppliers and job creation.
"Prices do not count for the purpose of the application. There is no reference or place for that as the statute reads there is no place for taking onto account consumer benefits," he said.
The Competition Tribunal ruled on May 31 that Walmart, the world's biggest retailer, could proceed with the deal on condition no jobs were cut for two years and the companies set up a R100 million fund to assist local suppliers.
The government said the conditions were inadequate and would result in a massive influx of imports that would undermine manufacturing output.
Appeal
The appeal against the tribunal's decision was brought by the departments of economic development, trade and industry, and agriculture, forestry, and fisheries -- as well as Saccawu.
Saccawu has filed a separate appeal against the approval of the takeover of Massmart on the grounds that the tribunal failed to take adequate consideration of the public interest.
Walmart paid R16.5bn in June for a 51% stake in Massmart, South Africa's biggest food and general goods wholesaler.
The company said the deal would create 15 000 jobs in South Africa within five years. Most of the R60bn it would spend on buying food and consumer goods would be sourced from local suppliers.
