Govt lodges review application of Wal-Mart/Massmart deal

"The review application points to serious flaws on the provision of relevant information and documents by the merger parties, in consequence of the curtailment of information that the Competition Tribunal ordered to make available for discovery," the Departments of Agriculture, Forestry and Fisheries, Economic Development, and Trade and Industry said in a joint statement.

At the end of May, the Competition Tribunal decided to allow the US retail giant to merge with Massmart, with conditions. Wal-Mart will acquire 51% of the South African retailer in a deal worth about R16.5 billion.

This week, public hearings into the merger were heard in Parliament. Today, 22 July 2011 the Portfolio Committee on Economic Development will be briefed by the Competition Commission and Competition Tribunal.

In a joint statement on Thursday, the departments said the merger should be referred back to the Tribunal for reconsideration.

The unavailability of relevant information prevented government from placing before the Tribunal all relevant information that was required for proper consideration by the Tribunal.

Government added that the timetable for the hearing set by the Tribunal, and the scheduling of witness testimonies compromised the ability of all parties to air their concerns.

"The departments argue in their papers that this lack of information in turn affected the ability of the Competition Tribunal to properly appreciate the potential damage of the merger and the crafting of appropriate conditions to address such damage."

Earlier, government had asked the Competition Tribunal to place conditions on the approval of the deal that would avoid substantial job losses in the Massmart supply chain.

"The review application requests the Competition Appeal Court to reconsider the merger approval and / or the conditions imposed by reviewing and setting aside the discovery order and the scheduling decisions and effectively remit the matter to the Competition Tribunal for reconsideration," said the directors' generals of the three departments.

"The three government departments participated in the Tribunal hearing in order to support domestic manufacturing and value adding industries. The Competition Act expressly requires the competition authorities to take into account the effect that the merger will have on the public interest, inter alia on employment and small business as well as black owned businesses."

Government says it presented a persuasive case in the matter.

"The state presented a compelling case to the Tribunal in the hearings on this matter, where it outlined the concerns that the merger of Massmart with Wal-Mart will bring about an increase in imports, and that even a 1% increase in imports could result in thousands of manufacturing jobs being lost in South Africa. Given the size, global reach and international experiences of Wal-Mart, there is good reason for the state to have such concerns."