Massmart ordered to contribute R200m to fund

10 Oct 2012

The Competition Appeal Court on Tuesday, 9 October 2012, ordered Massmart (MSM) to contribute R200m to a supplier development fund over five years as a condition for the approval of its merger with US retail giant Wal-Mart.

The decision by Judge Denis Davis came after the court asked for an expert report on the way in which such a development fund could assist small‚ micro and medium sized enterprises to become part of Wal-Mart's global and domestic supply chains.

The merged entity proposed an investment remedy that would have seen it spend R100m over three years. Unions‚ objecting to the merger‚ wanted the merged entity to commit itself to a fund worth R500m.

Judge Davis said the purpose of the fund would be to minimize the risks to micro‚ small and medium sized producers of South African products "caused or which may be caused" by Massmart's merger with Wal-Mart.

"In particular the fund should seek to incentivize the merged entity to purchase products from South African producers over and above the kinds of products that would in any event be so purchased."

The fund is designed to assist existing and potential South African suppliers to Massmart; who fall both within and outside of Massmart's priority supply chain development.

The multi-billion rand deal received strong opposition from the unions‚ and three government departments‚ including the Department of Economic Development.

Source: I-Net Bridge

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