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Shoprite dishes out fresh threat on Wal-Mart deal
Reiterating Shoprite CE Whitey Basson's price war threats made earlier this year, Gerhardus Ackerman, Shoprite's director of food buying and imports, told the Competition Tribunal on Thursday, 12 May 2011, that if Wal-Mart entered the local market, Shoprite would have no choice but to rely on cheap imports to compete.
Already in its fourth day of proceedings, the Competition Tribunal is hearing testimony on whether to give the go ahead to Wal-Mart's R16.5 billion bid for a 51% stake in Massmart, the owner of Game, Dion Wired and Makro.
"Wal-Mart is choosing not to build local distribution centres because they have access to cheaper imports," Ackerman told the tribunal.
In February, Basson said the group was willing to resort to cheaper imports in order to compete with Wal-Mart.
"If need be, we will close down a South African pasta manufacturer in three months if we can import their product cheaper to compete," Basson said.
He added that the US group was "very efficient and very fast" and it would not take them a long time to make inroads into the South African market.
Government and labour unions remain opposed to the deal, believing that Wal-Mart's global sourcing network would flood the South African market with cheap imports, undermining local manufacturers and suppliers and ultimately posing a threat to jobs.
About 60% of Massmart's merchandise is sourced from local manufacturers and earlier this week CE Grant Pattison told the tribunal that the government's demands on local procurement could put the deal at risk.
Pattison stated that local procurement would continue to be pursued by Massmart and Wal-Mart because it made commercial sense.
The hearing continues till Monday 16 May.
Source: I-Net Bridge
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