State spends R4m contesting Walmart deal

2012-04-10 16:15

Cape Town - Government has so far spent about R4.1m in challenging the Walmart-Massmart merger, Economic Development Minister Ebrahim Patel said on Tuesday.

In a written reply to a parliamentary question, Patel said his department was a party to proceedings involving the Walmart-Massmart Holdings [JSE:MSM] merger at the Competition Appeal Court (CAC), involving both a review of a decision of the Competition Tribunal, as well as an appeal against the decision.

The merger parties applied to the Competition Commission for approval of the proposed transaction during late 2010.

In early 2011, the Competition Commission recommended that the Competition Tribunal approve the transaction without any conditions.

Based on this outcome, the economic development department, together with the trade and industry and the agriculture, forestry, and fisheries departments, approached the tribunal to participate in the proceedings.

Following government's participation in the tribunal proceedings, the tribunal approved the merger in May 2011, subject to certain conditions.

Government then launched review proceedings against the tribunal's decision and asked to be party to the appeal launched by the trade union involved, on the basis of both procedural and substantive defects in the tribunal outcome.

"Government's objective in doing so was to ensure that all pertinent matters in relation to the effect of the merger on employment, local manufacturers, and small business could be ventilated before the competition authorities," Patel said.

In deciding the matter on appeal and review, the CAC recognised the importance of public interest considerations in assessing any merger, in particular those relating to small business and employment in supply chains.

This had been at the heart of government's case during all the legal proceedings in this matter.

The court also found that the conditions imposed by the tribunal had not been sufficiently interrogated in the process.

"The appeal process is not completed, since the court directed that three experts be nominated - one by government, one by Walmart, and one by the trade unions," he said.

The costs of the experts' work would be for Walmart's account.

Once the experts had concluded their work, parties might make submissions to the CAC, which would then conclude on the appropriate conditions.

The legal costs, including the costs of an economic expert, incurred to date by government as a result of its participation in the appeal and review proceedings before the CAC amounted to about R4.1m.

The economic development department's share to date of the costs for the review and appeal to the CAC was about R1.4m.

"The costs related to government's participation in the review and appeal proceedings before the CAC, should therefore be viewed in the context of the significant outcomes which have been achieved for the public in this matter," Patel said.

Commenting later, Democratic Alliance spokesperson Kenneth Mubu said the appeal was unwarranted. Walmart’s entry into the South African market was a positive development.

"It amounts to R16.5bn in foreign direct investment and Walmart projects that 15 000 jobs will be created in the Walmart-Massmart operation in South Africa," he said.

Walmart had furthermore indicated that it planned to significantly increase the number of Massmart retail outlets in South Africa and to use its activities in South Africa as a base to expand into the rest of the African continent.

"This creates further growth potential as South African producers would be well placed to stock Walmart’s stores in Africa.

"The government’s appeal against the investment was therefore unfathomable."

  • Jason - 2012-04-10 16:47

    Spend more. Win. Stop the Chinese under the guise of USA taking the food from our mouths.

      Heiku - 2012-04-10 16:54

      I'd like to see them try that! Once food is in my hands there is no way anyone is taking it, nevermind my mout

      Jason - 2012-04-10 17:17

      Its almost gone already

      Heiku - 2012-04-10 17:27

      I already ate it? I gotta be honest with you, I'm starting to doubt your integrity Jason.

  • Ben - 2012-04-10 16:52

    The appeal was ill-thought from the start. How do you appeal against your own process? And then you also alienate foreign investors!

  • braamc - 2012-04-10 17:16

    They were anticipating R40m in bribes?

  • David - 2012-04-10 17:17

    This is the same Minister who is making enemies of our BRICS partner,Brazil,via a very dubious poultry dumping ruling,which has already resulted in increased poultry costs to embattled consumers.

      clivegoss - 2012-04-11 06:43

      David this minister is a Turkey

  • braamc - 2012-04-10 18:49

    You oppose, you meet, you deal - when's the best time to enjoy Monaco?

  • Zahir - 2012-04-10 20:02

    Why is anc policy to move from one crises to next they can't seem to get anything right?

  • louis.langenhoven - 2012-04-10 20:33

    The heading is incorrect...please change to: State WASTES R4m on...

      Andrew - 2012-04-11 12:02

      Pray tell what was achieved in this fiacso. Loss of taxpayer funds, loss of confidence of potential foreign investor confidence and in all likelihood more money will go down the drain with further studies and having to deal with the outcome of same by the minister etc.

  • clivegoss - 2012-04-11 06:40

    4 m + pissed into the wind on just pleasing your "partners".Housing health job creation education W T F The song refrains "when will they ever learn ? when will they learn to learn ?"

  • brionyl.french - 2012-04-11 07:20

    so they have spent and wasted our tax payers money to try stop jobs and finance coming into our country...I dont understand isnt that what we need as a country, Jobs, Investment????

  • Zengfuey - 2012-04-11 07:49

    Let the three ministers pay the taxpayers (the state) back. This fruitless and wasteful expenditures must stop, just because people in government occassionaly gets political whims allegedly in their own interests, but disguised as 'acting in the interest of the people'

      Zengfuey - 2012-04-11 07:52

      Out of their own pockets, I wanted to say. We should be able to convert the expenditure into unsecured loans and have it paid into something like a power to the people fund...

  • Ivan - 2012-04-11 08:12

    R4million that could have been better spent on improving the lives of SA citizens. Why does the ANC government insist of wasting money on ridiculous lawsuits? Oh yes, they did not earn, just take from the taxpayer!

  • Roshnee - 2012-04-11 09:20

    This minister Ebrahim Patel should personally foot the bill. Fighting a battle when he knows no proper grounds to fight. Get rid of cheap Chinese imports if you are serious about protecting jobs.

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