The South African government has filed a review application with the Competition Appeal Court regarding the Competition Tribunal's decision to approve conditionally the acquisition by Wal-Mart Inc of Massmart Holdings (for further details please see "Wal-Mart and Massmart win at the Competition Tribunal"). The government has since indicated that it has no intention of opposing the merger, but that it would like to see the conditions imposed on the merger strengthened.
The review comes after the lodging of an appeal of the decision by the South African Commercial Catering and Allied Workers' Union's (Saccawu).
The review application was brought by Economic Development Minister Ebrahim Patel, Trade and Industry Minister Rob Davies and Agriculture, Forestry and Fisheries Minister Tina Joemat-Pettersson. These cabinet ministers argue in their papers that:
"The Tribunal erred in making the scheduling decisions in that they precluded the parties who opposed the merger, or had otherwise intervened, including the applicants, from fully and properly ventilating their concerns and their submissions on the conditions to which any approval should be subject."
The review application came in the same week that Parliament's Portfolio Committee on Economic Development held hearings on the transaction.
Contrary to this initial indication that the government wished to block the merger, reports indicate a change in the government's intention. The government is now allegedly interested only in strengthening the potential penalties which the merging parties face in respect of the R100 million supplier development fund. The government is proposing that the fund be increased should the effect on suppliers, as a result of the merger, be more than the R100 million available. A more recent report indicates that the government departments are recommending that the supplier development fund be increased to R500 million rather than R100 million, as they proposed on the final day of the tribunal's hearing.
For further information on this topic please contact Desmond Rudman at Webber Wentzel by telephone (+27 11 530 5000), fax (+27 11 530 5111) or email ([email protected]).