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Govt cautious on Walmart-Massmart merger
Jun '11
South Africa's Government has taken a cautious note of the Competition Tribunal's decision to permit the US retail major Walmart to merge with Massmart along with the conditions imposed, and will carefully study the same, a statement said.

The statement was jointly made by the Departments of Economic Development, Trade and Industry and the Department of Agriculture, Forestry and Fisheries.

The Tribunal had arrived at a decision to allow the merger of Walmart and Massmart subject to some conditions, after it held hearings for the purpose in early part of May. The Tribunal held hearings following the recommendations of the Competition Commission in February 2011.

The conditions to which the agreement has been subjected to are: the merged entity should not lay off any workers within next two years; it should reinstate the 503 Massmart employees who were laid off in June last year; it should honour the labour agreements already in place; it should not contest SACCAWU's role as the collective bargaining agent, at least for next three years; and it should establish a fund of R100 million to help the domestic suppliers and small businesses.

The Tribunal has said that it would justify its decision by giving reasons on or before June 29, 2011.

Initially, the Commission had supported sanctioning the deal without any conditions. However, it then changed its view and preferred subjecting it to some conditions. This was after the Massmart shareholders voted in favour of accepting the US Company's proposal to buy 51 percent stake in the South African conglomerate at a price of R16.5 billion.

The Departments were against the merger, as they contend that the deal would lead to redundancy of jobs and suppliers would also go out of business.

Trade unions like the South African Clothing and Textile Workers' Union (SACTWU), the South African Commercial, Catering and Allied Workers' Union (SACCAWU) and the Congress of South African Trade Unions (COSATU), and other unions who sell their goods to the retail industry, are also opposing the merger.

Expressing its discontent over the Tribunal's decision, COSATU said that the concerns raised by it, by the Government, and by the concerned South Africans have not been addressed. It added that all agreements negotiated by unions must be honoured and welcomed the condition of reinstating the workers.

COSATU spokesperson Patrick Craven said, “Our association has never resisted foreign investment in the country, especially when it is likely to create new, decent jobs. However, this merger is rather seen to take away many of the jobs, due to the US retailer having a competitive advantage. It will not only compel most of its competitors to go out of business, but may also result in closing of domestic manufacturing firms that fail to stand against invasion of cheap imports.”

The trade union further voiced its willingness to engage the US firm on the issue. However, if no reasonable deal is struck, the COSATU Central Committee, during its meeting from June 27 to 30, would deliberate on how to take its mass action campaign further, Craven said.

Fibre2fashion News Desk - India

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