South Africa Studying Conditions For Wal-Mart/Massmart Merger
June 01 2011 - 6:13AM
Dow Jones News
South Africa's government is assessing the conditions placed on
Wal-Mart Stores Inc.'s (WMT) proposed $2.4 billion merger with
South African retailer Massmart Holdings Ltd. (MSM.JO) to see if
they are adequate to meet public interest concerns.
South Africa's Competition Tribunal approved the merger subject
to Wal-Mart and Massmart agreeing to make no job cuts for the first
two years following the merger, to respect union bargaining
agreements for three years, to give preferential hiring to the 503
workers laid off in 2010 before the merger was announced, and to
establishing a 100 million rand ($14.7 million) fund to help train
local suppliers to be more competitive globally.
"We will study whether the specific measures set out in the
conditions adequately meet the public interest tests set out in the
Competition Act and whether they will secure the desired outcome,
in particular ensuring that South Africa is not faced with
large-scale job losses in supplier industries to
Massmart/Wal-Mart," said a joint statement from the Economic
Development Department, Department of Trade and Industry and the
Department of Agriculture, Forestry and Fisheries.
The tribunal's decision follows a week-long hearing in early
May, when both the government departments and unions voiced
concerns that Wal-Mart's supply chain history of using cheap
imports would squeeze out local suppliers, cause business closures
and lead to job losses.
"We welcome the recognition by the Competition Tribunal that a
merger as contemplated should be subject to conditions," the
statement said.
"Based on the outcome of the study of the conditions and the
responses of Wal-Mart/Massmart, we will decide on the next steps to
take. Government reserves its legal options at this stage."
-By Devon Maylie, Dow Jones Newswires; +27 (11) 783 7848;
devon.maylie@dowjones.com