Walmart-Massmart deal being dealt with on its merits – Manyi

2011-06-09 10:46

The Walmart-Massmart deal is being dealt with on its own merits and does not indicate a general government stance on foreign investments, Cabinet spokesman Jimmy Manyi said today.

Briefing the media following the executive’s regular Wednesday meeting, he said Cabinet had noted the Competition Tribunal’s ruling on the matter.

Cabinet was in full support of the stewardship provided by the ministers of economic development, trade and industry, and agriculture, forestry and fisheries as they assessed the ruling.

“Furthermore, Cabinet wants to make it very clear that this specific matter is being dealt with on its own merits,” he said.

The position government was pursuing on the matter was “issue-specific” and did not constitute a “general government posture” on foreign investments.

“Given a different set of circumstances, government will act in an appropriate manner. Each and every matter is addressed on its own specific merits.”

Manyi said it was very much in the interests of government that the issues of job retention were upheld, as well as the labour laws of the country.

“Government will continue to act in the public interest and will always conduct itself within the parameters provided by the law and the Constitution of this country,” he said.

Last week, the United States retailer’s CEO, Doug McMillon, said Walmart expected to complete the R16.5 billion transaction to buy a 51% stake in Massmart within weeks, after getting the go-ahead from the competition authorities.

The Competition Tribunal ruled that the deal could go ahead with conditions proposed by Walmart and Massmart.

The conditions included setting up a R100 million supplier development fund, no merger-related retrenchments for two years, and the continued recognition of the SA Commercial Catering and Allied Workers’ Union for three years post the merger.

McMillon said the merged entity would open new stores, create thousands of new union jobs, and anticipated growing its food business by over 50% in five years.

Walmart said it had committed to sourcing the vast majority of fresh food products from South Africa, and was planning a “substantial” programme to train and develop thousands of local farmers, with a specific focus on black economic empowerment.

The deal was seen as a test case for South Africa’s competition authorities, particularly as the merger raised no competition concerns, but did concern the public interest, the tribunal said in its finding.

Government and unions were concerned the deal would lead to job losses and hurt local procurement.

However, the tribunal said conditions proposed by Walmart and Massmart to counteract these were sufficient, and warned they would be enforceable.

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