Govt to Review Walmart-Massmart Merger

Government is not considering a veto of the Walmart-Massmart merger, but believes public interest concerns make a review essential, economic development director-general Richard Levin told MPs. Speaking during public hearings on the R16.5 billion merger, which sees US giant Walmart taking a 51 percent stake in the local retailer, he said this was the reason for government's application to the Competition Appeal Court.

The Walmart-Massmart merger was approved by the Competition Tribunal of SA on May 31 this year, subject to certain conditions. The three-day hearings, which end on Thursday, are being hosted by the economic development portfolio committee.

"I am certainly not aware of anything within government which is contemplating a veto power... but the act does make provision for a review of decisions by the tribunal. Everything that's happening is within the... ambit of the law and... is not an appeal by government, it's a review," Levin said.

During the merger process, government had demonstrated there was "substantial public interest concern" in the merger. "We do believe that there is evidence in the possession of the merging parties that will confirm the extent of the negative impact of the merger. We have therefore now applied to review the tribunal's decision on the merger as the process is adopted in the merger hearing. We believe it is absolutely essential that the public interest concerns are properly ventilated in the tribunal proceedings after the merging parties have made adequate discovery of information and relevant witnesses have had sufficient time to make oral submissions," he said.

Late on Wednesday, government, citing an "unfair" merger hearing, filed papers at the Competition Appeal Court seeking to have the tribunal's decision to approve the merger set aside. The application was brought by Economic Development Minister Ebrahim Patel, Trade and Industry Minister Rob Davies, and Agriculture, Forestry and Fisheries Minister Tina Joemat-Pettersson.

Earlier this month, the SA Commercial, Catering and Allied Workers' Union launched its own legal appeal against the tribunal's approval of the merger.

Levin told the hearing on Thursday that government acknowledged the independence of the Competition Tribunal. "I do acknowledge the independence of the competition authority... [but] this does not mean that I would blindly agree with each and every decision those authorities make. And the legislation provides me with instruments to engage and contest those authorities," he said.

Earlier, MPs heard that South Africa needed to "bend over backwards" to encourage foreign investment and stop deluding itself it is a major global economy.

Free Market Foundation executive director Leon Louw told the hearing that if the country hoped to be internationally competitive, government should stop concerning itself with protecting local businesses. "People talk about South Africa as if we're a serious global player. We're a little minnow, we're less than half a percent of the world's GDP. "And if we have the world's big corporations in South Africa investing abroad... we should be thrilled that a tiny little economy like ours gets taken seriously by big role players." He further warned against interference in who did or did not invest in the country.

"We forget that if we want to become internationally competitive, as the Competition Act and your department [economic development] policy says, then one of the things we certainly should be doing is being very, very reluctant about interfering with who does and doesn't invest here, or who from South Africa invests abroad.

"We should bend over backwards to try to be a global player and stop this myopic little look at ourselves, as if we're some serious economy. We're a tiny little economy and to protect local businesses, big or small, is really making us internationally uncompetitive," Louw said.

Source:Sapa Govt to review Walmart-Massmart merger TimesLive, 21 July, 2011

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First published by TimesLive, South Africa

FMF Policy Bulletin/ 26 July 2011

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