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.
The fact of the matter is that this company wants to participate in our economy - on our playing field, according to our rules - and partner with our people to expand their operations into Africa. This will bring investment, it will bring skills, it will bring jobs, it will open up more markets and it will bring new opportunities to our shores. There is no logical reason for any member of the Zuma administration to oppose this merger - especially since the merger has been approved on conditions ensuring that South African labour laws will be respected by Walmart.
Thirdly, the Competition Tribunal has found, without a shadow of a doubt, that this merger would not lead to monopolistic activities in the retail sector and that the merger can therefore be approved.
This makes complete sense - Walmart currently has no real operations in South Africa, meaning that a merger would have no impact on competition in the retail industry whatsoever. The core mandate of the Competition Tribunal has therefore been met. The Competition Tribunal is mandated with stopping monopoly formation - not with enforcing ideological agendas. The attempt by the Ministers to block this merger by way of the Competition Tribunal therefore also highlights their fundamental misunderstanding of the role of the Tribunal.
Finally, this issue underlines very clearly why the Zuma administration's economic policy approach is failing South Africans. Here is a very clear choice between more investment, more growth, more jobs and more prosperity; or less of all of these things. Ministers Patel, Davies and Joemat-Pettersson have made the wrong decision for all the wrong reasons. They need to withdraw this appeal as a matter of urgency. I will today be writing to the three ministers concerned to urge them to do just this.
Statement issued by Kobus Marais MP, DA Shadow Minister of Economic Development, July 21 2011
Click here to sign up to receive our free daily headline email newsletter
