Press statement on Competition Tribunal decision on Massmart/Walmart

2 Jun 2011

The Competition Tribunal today released its decision on the merger between Walmart and Massmart and approved the merger subject to four conditions.

The conditions imposed on the parties are that the merged entity:

• may not retrench workers for a period of two years
• must give preferential employment opportunities to 503 workers retrenched during June 2010 (and take into account their years of service in Massmart)
• honour existing labour agreements and not challenge South African Commercial and Catering Workers' Unions (SACCAWUs) role as the collective bargaining agent for at least the next three years
• set up a R100 million fund to support local suppliers and small businesses as well as provide training to South African suppliers on how to do business with the merged entity and Walmart.

The Competition Tribunal will supply reasons for their decision on or before 29 June 2011. Parties to the merger, trade unions or government departments may then lodge an appeal to the Competition Appeal Court should they be dissatisfied with the ruling. Government has taken careful note of the decision of the Competition Tribunal as well as the conditions that have been imposed.

The three government departments with responsibility for employment and industrial development along the Massmart supply-chain, namely the Economic Development Department (EDD), Department of Trade and Industry (the dti) and the Department of Agriculture, Forestry and Fisheries (DAFF), joined the proceedings at the Competition Tribunal in order to request conditions to be imposed on the merger. The requested conditions related to local procurement, job losses, labour rights and small business development.

Government had originally engaged the merger parties to attempt to secure commitments that could be incorporated as conditions to the transaction. The merger parties refused any conditions during the discussions until government decided to participate in the Competition Tribunal hearing, secured discovery of key documents through the legal process and led evidence of the impact that the merger without conditions will have on the public interest matters set out in the Competition Act. But for government's intervention, the proposed transaction would have proceeded without any proper ventilation of these issues or any measures or conditions to protect South African workers and local manufacturing capacity.

We welcome the recognition by the Competition Tribunal that a merger as contemplated should be subject to conditions. As noted, the merger parties had refused to voluntarily offer conditions at the commencement of the discussions prior to the Competition Tribunal hearing. The Competition Commission had previously recommended the approval of the transaction without conditions but changed its position in favour of conditions, based on new evidence that had emerged during the proceedings at the Competition Tribunal.

We welcome the decision by the Tribunal that these conditions should cover areas such as commitments to avoid job losses, protection of worker rights and measures to promote procurement of locally manufactured goods. These matters are vital to ensure that we achieve the goal of increasing employment and decent work opportunities in South Africa.

We will study whether the specific measures set out in the conditions adequately meet the public interest tests set out in the Competition Act and whether they will secure the desired outcome, in particular ensuring that South Africa is not faced with large-scale job losses in supplier industries to Massmart/Walmart (both in agriculture and manufacturing) and that the merged entity provide real and effective support for local manufacturers and small manufacturers.

We will meet with Walmart/Massmart to discuss their commitments in the light of the conditions that the Tribunal has imposed and based on the statements made by Massmart and Walmart executives during the Competition Tribunal proceedings that they do not intend to materially increase the level of imports.

Based on the outcome of the study of the conditions and the responses of Walmart/Massmart, we will decide on the next steps to take. Government reserves its legal options at this stage.

Statement issued by Department of Trade and Industry and Department of Economic Development, June 2 2011

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