Government seeks a review of the Walmart/Massmart merger approval

22 Jul 2011

The Department of Agriculture, Forestry and Fisheries, Economic Development department and the Department of Trade and Industry, have lodged a review application seeking the Competition Appeal Court to review the decision by the Competition Tribunal to approve the Walmart/Massmart merger and to refer the matter back to the Competition Tribunal for reconsideration.

The review application points to serious flaws on the provision of relevant information and documents by the merger parties, in consequence of the curtailment of information that the Competition Tribunal ordered to make available for discovery.

This prevented government from placing before the Tribunal all relevant information that was required for proper consideration by the Competition Tribunal, based on crucial data and documents in the possession of the merging parties; for example on the current level of local procurement and the potential for future imports. This also affected the crafting of appropriate conditions relating to the approval of the merger.

In addition, the timetable for the hearing set by the Competition Tribunal and the scheduling of witness testimony compromised the ability of all parties to properly ventilate their concerns. The departments argue in their papers that this lack of information in turn affected the ability of the Competition Tribunal to properly appreciate the potential damage of the merger and the crafting of appropriate conditions to address such damage.

Government had requested the Competition Tribunal to place conditions on the approval of the transaction that would avoid substantial job losses in the Massmart supply-chain.

The review application requests the Competition Appeal Court to reconsider the merger approval and/or the conditions imposed by reviewing and setting aside the discovery order and the scheduling decisions and effectively remit the matter to the Competition Tribunal for reconsideration.

The three government departments participated in the Tribunal hearing in order to support domestic manufacturing and value adding industries. The Competition Act expressly requires the competition authorities to take into account the effect that the merger will have on the public interest, inter alia on employment and small business as well as black owned businesses.

The state presented a compelling case to the Tribunal in the hearings on this matter where it outlined the concerns that the merger of Massmart with Walmart will bring about an increase in imports, and that even a 1% increase in imports could result in thousands of manufacturing jobs being lost in South Africa. Given the size, global reach and international experiences of Walmart there is good reason for the state to have such concerns.

Statement issued by the Department of Trade and Industry, July 22 2011

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