Lawyers for the South African government have requested a review of the decision to allow Wal-Mart to purchase a controlling stake in Massmart Holdings. Wal-Mart paid 16.5 billion rand ($2.6 billion) in June for a 51% stake in Massmart, South Africa’s largest food and general-goods wholesaler. The current ruling by the Competition Tribunal states that Wal-Mart could proceed with the deal on the conditions that no jobs are cut for a period of at least two years and the company will create a 100 million-rand ($12.4 million) fund to assist local suppliers and manufacturers.
In court papers, Economic Development Minister Ebrahim Patel, Trade and Industry Minister Rob Davies, and Forestry and Fisheries Minister Tina Joemat-Pettersson said the transaction should be reconsidered because the tribunal’s hearings were flawed. Lawyers requested that regulators review the decision because they say that the regulators failed to adequately consider the public interest when making a decision on the deal. Regulators were also faulted for failing to secure adequate information from the retailers about their product sourcing or how it would change, and neglecting to allocate sufficient time to question witnesses.
Lawyers for the government objected on the grounds that the conditions were inadequate to protect the economy and prevent a surge in imports from undermining manufacturing output. Wim Trengove, the government’s senior counsel, said, “The question before court is whether the merger can or cannot be justified on public-interest grounds.” A three-member panel, headed by Judge Dennis Davis, is hearing the case.
Wal-Mart, based in Bentonville, Arkansas, outlined plans for the creation of 15,000 jobs in South Africa within five years and the allocation of nearly 60 billion rand in additional purchases of food or consumer goods to local suppliers during the same time period. Jeremy Gauntlett, senior counsel for Wal-Mart and Massmart, said, “Mergers are an attribute of commercial activity, which are not in themselves bad. There was no serious debate before the tribunal that one was looking at a significant lowering of prices” as a result of Wal-Mart’s entry into the South African market.