COSATU has today, 13 May 2011, submitted the following Section77 Notice on Walmart-Massmart Merger
1. Introduction
1.1 The Congress of South African Trade Unions (COSATU) notes the bid by Wal-Mart Stores Inc. ("Wal-Mart") to acquire 51% of South Africa's major retail company, Massmart Holdings Ltd ("Massmart"). The Massmart shareholders on 17 January 2011 voted in favour of the merger; despite impassioned pleas from various stakeholders for the rejection of the merger bid.
1.2 Stakeholders, including COSATU affiliated unions, South African Commercial, Catering and Allied Workers Union (SACCAWU), Southern African Clothing and Textiles Union (SACTWU), Food and Allied Workers Union (FAWU) and National Union of Metal Workers of South Africa (NUMSA), made submissions to the Competition Commission to ask the Commission to recommend to the Competition Tribunal to prohibit the merger based largely on public interest grounds and on competition grounds
1.3 Again, to the dismay of the stakeholders, on 11 February 2011 the Commission recommended that the Tribunal approve the merger without conditions as "the merger did not raise competition concerns". The Commission was satisfied that the public interest concerns raised by various stakeholders would be resolved through a facilitation process undertaken by the Department of Economic Development with the merging parties and the unions. No agreement has since been reached.
1.4 Given these developments, COSATU is forced to file a Section 77 Notice, in terms of the Labour Relations Act 89 of 1995 as amended. The filing of this Section 77 Notice represent our intention to embark on a protest action should the Tribunal approve the merger or approve the merger without imposing conditions to protect the concerns raised by unions participating in the hearing before the Tribunal.
2. Reasons for the protest action
2.1 Pick n' Pay, Shoprite, Spar (SA), Massmart, Metcash and Woolworths are six dominant grocery retailers in the South African Grocery Market. This acquisition will further entrench concentration in the retail sector. The argument made that the acquisition will ensure lower prices for consumers is out of synch with the South African reality. Due to high concentration levels in the retail sector, many companies have been involved in anti-competitive conduct which resulted in higher prices for the consumers. For instance, recently the Competition Commission uncovered collusion in bread and milling, poultry and milk industries.
2.2 Furthermore, it is possible for Wal-Mart, given its massive size, can force its suppliers to lower prices in its quest to be seen as benefiting consumers through lower prices with disastrous consequences to jobs in the companies supplying Wal-Mart.
2.3 With the entrenchment of concentration in the retail sector, it will be difficult for Small and Medium Enterprises (SMEs) to operate and for new entrants to enter the retail market. In the process jobs are likely to be lost.
2.4 In the Framework for South Africa's Response to the Economic Crisis, all social partners committed themselves to encouraging "local procurement of supplies, services, and other requirements whenever possible in order to maintain local output and employment levels". The Industrial Action Plan (IPAP2) and the New Growth Path (NGP) also emphasise the importance of local procurement in order to strengthen manufacturing capacity of the economy in order create more decent jobs.
2.5 However, Walmart is known for importing massively from countries with low labour costs due to such countries not respecting workers rights. The merger will result in upstream supplier market shrinking due to importation of cheap goods from elsewhere in the world.
2.6 Wal-Mart has the reputation of being anti-union and in the process denies workers their rights. Chapter 2 of the Constitution of the Republic of South Africa gives workers the right to fair labour practices, to form and join a trade union, to participate in the activities and programmes of a trade union and to strike. Despite these workers rights enshrined in the Constitution and other labour laws, there are employers who have found ways of circumventing the law and denying workers their rights. This situation may be exacerbating by the merger between Massmart and anti-union retail giant Walmart.
3. Our demands
3.1 COSATU demands that the Tribunal must prohibit the merger application between Massmart and Wal-Mart for the reasons we have cited in 2 above.
3.2 Should for some other reasons the Tribunal approve the merger, it must impose strict conditions to ensure that workers rights are protected and that the national objective of creating decent jobs in the country is realised both within the retail sector and supply chain.
3.3 The Wal-Mart-Massmart merger before the Competition Authorities has put the spotlight on the role and transformation of the retail sector. It has demonstrated an urgent need for government to develop and adopt a retail sector policy and strategy that promotes and defends the socio economic interests of workers.
4. Respondents
4.1 Massmart Holdings Ltd;
Mass Mart House
16 Peltier Drive
Sunninghill Ext 6
Sandton
4.2 Department of Trade and Industry; and
77 cnr Mentjies and Esselen Streets
DTI Campus
Block A 3rd Floor
Sunnyside
PRETORIA
4.3 Department of Economic Development.
77 cnr Mentjies and Esselen Streets
DTI Campus
Block A 3rd Floor
Sunnyside
PRETORIA
5. The protest action
5.1 If the Competition Tribunal approves the merger or approves the merger without conditions, which adequately address our concerns raised above, COSATU will have no option but to mobilise its members for a protest which will take the form of marches, demonstrations, pickets and stayaways.
Statement issued by Patrick Craven, COSATU national spokesperson, May 13 2011
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