A walmart Store in the US
Pretoria — Walmart Stores will now trade in South Africa, with the Competition Tribunal having approved its merger with Massmart subject to conditions, said the tribunal.
“The Competition Tribunal has today approved the merger between Wal-Mart Stores Inc. of the United States (“Walmart”) and South African retailer Massmart Holdings Limited (“Massmart”), subject to conditions,” the tribunal announced on Tuesday.
The decision follows hearings earlier this month on the merger. The hearings came about at the recommendation of the Competition Commission in February that the merger be approved without conditions. This after shareholders voted to accept the US company’s bid to acquire 51 percent of Massmart in a deal worth approximately R16.5 billion.
According to Walmart, its rationale for entering into the transaction is a desire to be in emerging markets, especially South Africa and the sub-Saharan region.
The Departments of Economic Development, Trade and Industry and Agriculture, Forestry and Fisheries were opposed to an unconditional approval of the merger, proposing instead that the merger be approved with conditions to protect the public interest.
Labour unions, namely the South African Commercial, Catering and Allied Workers’ Union (Saccawu), the South African Clothing & Textile Workers’ Union (Sactwu), Congress of South African Trade Unions (Cosatu) and other unions in industries which sell products into the retail sector intervened in the matter, proposing that the merger should have conditions and that if this was not possible, that the merger be prohibited.
The tribunal said it was common cause that the merger raises no competition concerns, that Walmart does not compete with Massmart, which includes stores such as Game, Dion Wired and Makro in its chain.
The commission had initially recommended that the merger go ahead without conditions, but later changed its standing as it received evidence while also recommending the reinstatement of over 500 workers that had been retrenched by Massmart.
The merged company would be forced to honour already existing agreements with unions for a period of three-years.
Walmart (which operates in several countries around the world, including Mexico and Japan) said it was prepared to commit to no retrenchments for two years.
“This merger will also likely have certain losers. Walmart’s proposed entry into areas presently underserved by large retailers may displace certain small businesses and in others, reduce the market share of some of the major retailers. That is an inevitable consequence of the competitive process,” said the tribunal.
“We are, however, required by the [Competition] Act not to be indifferent to certain public interest concerns caused by a merger, if they are substantial. The purpose of public interest concerns is not to protect firms from losing out to market forces, but to protect a substantial public interest.”
The tribunal said it would give reasons for the decision on or before 29 June 2011.
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