The Competition Tribunal has announced its approval of the Walmart/Massmart deal subject to conditions.

According to Moneyweb, the conditions include:

  • The merged entity may not make retrenchments for two years.

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  • Massmart must spend R100m on a programme to develop local suppliers and must report back to the Competition Commission on progress.



SAPA Reports on the announcement

US retail giant Walmart can go ahead and acquire a controlling stake in Massmart, with conditions, the Competition Tribunal said on Tuesday.

“Today the Competition Tribunal approved the merger between Walmart and Massmart subject to certain conditions,” the Tribunal said in a statement.

Reasons come later

Full reasons for the Tribunal’s decision will be made public within 20 working days.

In January, shareholders voted to accept Walmart’s bid to acquire 51 percent of Massmart for R148 a share in a deal worth around R16,5 billion.

The Competition Commission initially recommended the deal go ahead without conditions. However, it later changed its mind based on new evidence and recommended that Massmart reinstate 503 retrenched workers and the new merged entity be forced to honour existing agreements with trade unions for the next three years.

Earlier in May, the tribunal held hearings in Pretoria during which trade unionists and government departments argued that jobs and local procurement in South Africa could be jeopardised by the deal.

Unions and Government opposed

Unionists argued that Walmart was known to be anti-union and hard on labour.

Unions and government wanted the tribunal to either decline permission for the deal to go ahead, or alternatively impose enforceable conditions on Walmart.

Unfair and illegal

However, Walmart argued that imposing conditions would violate numerous international trade agreements signed by the South African government.

It would also give an unfair advantage to the merged entities’ competitors.

Walmart said it was prepared to commit to no retrenchments for two years, and that the merged entity would honour all labour agreements to which Massmart was a party.

Promise to spend R100 million

Massmart and Walmart also vowed to spend R100 million to develop local South African suppliers over the next three years.

Government said it was concerned about Walmart’s procurement policies. It argued if Walmart were a country, it would be China’s eighth largest trading partner.

Walmart’s belief in low prices governed its procurement policies and that there was a substantial public interest in the deal and its effects, according to government.

Stores involved include Game, Dion Wired and Makro

The Massmart group includes Game, Dion Wired, Makro, Builders Warehouse and Masscash.

Walmart operates around the world, including Canada, Brazil, China, Chile, Japan and Mexico. It wants to buy the stake in Massmart to get a foot in emerging African markets.