[pic]
NATIONAL ASSEMBLY
QUESTION FOR WRITTEN REPLY
QUESTION NO.: 1403
DATE OF PUBLICATION: 27 MAY 2011
Mr S J F Marais (DA) to ask the Minister of Economic Development:
(1) Whether his department has interventions in place in the eventuality
that the Competition Tribunal agrees to the Walmart/Massmart merger;
if so, what are the relevant details; if not,
(2) whether the Government intends taking up the position of organised
labour in its negotiations with Walmart; if not, what is the position
in this regard; if so, what are the relevant details;
(3) whether he has found that the Walmart transaction will add value as a
major source of foreign direct investment in line with the
Governmentâs policies in this regard; if not, why not; if so, what are
the relevant details?
NW1571E
REPLY
(1) The Competition Tribunal 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 re-employment opportunities to 503 workers
retrenched during June 2010 (and take into account their years of
service in Massmart);
⢠honours existing labour agreements and not challenge SACCAWUâs role as
the collective bargaining agent for at least the next three years; and
⢠sets up a R100m 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 (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 governmentâs 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 there should be
conditions that 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 and mechanisms 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.
(2) Governmentâs mandate is derived from the relevant provisions of the
Competition Act and the need to create work opportunities, save
existing jobs here possible and expand South Africaâs
industrialisation efforts.
(3) Massmart operates principally in South Africa through a number of
retail outlets. However, the majority of its shares are already held
by foreign shareholders. During 2010, 72% of the shares of Massmart,
according to the report of the Competition Commission, were held by
foreign shareholders.