Walmart-Massmart: Cabinet intervention constitutes obstruction of foreign investment
The Democratic Alliance (DA) is deeply concerned by the call made yesterday by Ministers Patel, Davies and Joemat-Pettersson for a review of the decision taken by the Competition Tribunal regarding the Walmart-Massmart merger. This is a perplexing move that is deeply concerning for several important reasons (see Business Day report).
Firstly, and most importantly, it creates a precedent of state intervention against foreign investment. Just yesterday, the World Bank suggested that South Africa's only road to development was through increased investment and savings. The Zuma government should be leading the charge to welcome foreign investors to our shores. Every report, every study and every major financial institution has been crystal clear on this subject - South Africa needs more foreign investment to jumpstart economic growth and job creation.
It is therefore deeply troubling that the Zuma cabinet is taking such an obstructionist approach to this merger - which could bring significant foreign investment into our economy. The move by these ministers firmly positions them (and, by extension, this administration) against foreign investment and foreign partnerships in the minds of potential investors.
The fact is that Walmart wants to set up shop in South Africa in order to launch into the rest of Africa. It solidifies South Africa as a launching pad for foreign businesses to expand into Africa and opens up more opportunities for South Africans to partner with Walmart to gain access to new markets in Africa.
Secondly, it is deeply troubling that the ministers themselves would appeal a decision by an independent body - potentially flouting competition law by essentially siding with a party in a competition dispute. The current government is thus intervening directly in a competition dispute that does not concern it. Indeed, it would appear that this decision by these Ministers is simply a knee-jerk reaction based on ideological biases against American business practices in general.