Wal-Mart appeal 'absurd': business community

Economic Development Minister Ebrahim Patel, Trade and Industry Minister Rob Davies and Agriculture, Forestry and Fisheries Minister Tina Joemat-Pettersson last month filed an application to the Competition Appeal Court to review and set aside the Competition Tribunal's May approval of the Wal-Mart/Massmart merger.

"The tribunal allowed only some of the government's requests for information and prejudice (was) caused by limitations imposed on the time allowed for witnesses to make oral submissions and also the number of witnesses allowed at the hearings process," they said in a statement.

The government is adamant that the deal will pose a threat to local manufacturing and is demanding tougher conditions to avoid large-scale job losses in Massmart's supply-chain.

But according to Mike Schussler, the business community has been left 'very' confused.

"SA has the lowest number of adults employed outside of a warzone - we have the highest dependency rate of people on welfare - we have low numbers of FDI and we're doing our best to keep away a foreign investor who could potentially increase jobs," Mike Schussler told I-Net Bridge/BusinessLIVE.

SA's unemployment rate rose to 25.7% between the first and second quarters of 2011.

The ministers also believe that the conditions imposed by the tribunal will prove to be insufficient.

"A R100 million supplier development fund could pale into insignificance given the likely impact of a substantial shift to imports by the merged entity," they said.

The tribunal approved the deal with conditions that included no retrenchments for two years and a R100 million fund to develop local suppliers.

Certain portions of the fund will be used to establish farms to help rural farmers grow and supply fresh produce to Massmart stores.

The brakes, however, will not be put on implementation of US powerhouse Wal-Mart's R16.5 billion deal with Massmart.

Wal-Mart, in recent weeks has been working with various Massmart divisions to deliver the anticipated benefits of their transaction for consumers and suppliers.

These benefits include a broader range of products at competitive prices and opportunities to supply Wal-Mart's global network of stores.

"The merged companies have prioritised the delivery of integration benefits and significant progress has already been made.

"These opportunities are extensive and range from more efficient supply chain practices to improved store energy efficiency," said Brian Leroni, Massmart's corporate affairs executive.

Last week Lonrho's Oceanfresh said it signed a deal to supply Wal-Mart in the US hake fillets from SA. The hake will be a new line for Wal-Mart and the company says it is part of its promise to create jobs in Africa. At least 500 Wal-Mart stores in the US will receive the fish from October this year.

"If you want to stay poor, you keep everyone out - it's exactly what apartheid did. They only wanted certain firms to come into SA - they protected the ones that were here and paid them subsidies and at the end of the day we busted sanctions to get stuff in and make the economy very expensive.

"Here we have a company coming in who could help us lower the cost of doing business - one of the highest costs in SA is logistics. Wal-Mart is a leader in logistics," Schussler said.

Timeline for the Wal-Mart/Massmart deal:

• 27 September 2010: Massmart receives a non-binding proposal from Wal-Mart to acquire its entire issued share capital for 148 rand per share
  
• 28 October: Wal-Mart mulls a smaller partial offer for more than 50%, one that will see Massmart retain its listing on the JSE
  
• 29 November: Wal-Mart announces its firm intention to acquire 51% of Massmart for 148 rand cash per Massmart share
  
• 17 January 2011: Massmart shareholders vote in favour on the deal
  
• 12 February: The Competition Commission recommends that the deal be approved unconditionally
  
• 22 March: The Competition Tribunal grants a delay in the hearing process to allow more time for the government and other stakeholders to make submissions under SA's "public interest" criteria
  
• 9-13 May: Competition Tribunal hearings recommence
  
• 16 May: Closing arguments; the Competition Commission changes its position, saying the takeover should only be approved with pro-labour conditions.
  
• 31 May: The Competition Tribunal approves the merger, subject to conditions
  
• 20 June: Wal-Mart completes its investment for a stake in Massmart
  
• 26 June: Wal-Mart and Massmart advertise price cuts and new business opportunities for SA in an eight page colour advertisement in the Sunday Times newspaper
  
• 19 July: The Parliamentary Portfolio Committee on Economic Development schedules three days of public hearings on the entry of Wal-Mart into the South African market
  
• 20 July: The Competition Appeal Court receives an application from the Department of Economic Development, the Department of Trade and Industry and the Department of Agriculture, Forestry and Fisheries, who want the deal reviewed. They cite "irregularities" in the Competition Tribunal hearing procedures
  
• 26 July: Lonrho's Oceanfresh says it has signed a deal to supply Wal-Mart in the US hake fillets from South Africa
  
• 27 July: Saccawu files supplementary notice to appeal against the Competition Tribunal's decision.