Namibian challenge to Massmart takeover

31 August 2011

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31 August 2011 | Angeline Albert

Namibia’s competition authority is challenging Wal-Mart’s plans to take a 51 per cent share in the South African retailer Massmart.

According to the Massmart’s latest financial results, the Competition Commission of Namibia had appealed against the decision of the country’s High Court to allow the takeover deal, having also previously contested a similar ruling in favour of the acquisition by Namibia’s competition tribunal. A final decision will now be made by the Supreme Court of Namibia on 17 October.

The US retailer’s bid for a majority stake in Massmart was approved by South Africa's Competition Tribunal in June, but the South African government and the Congressof South African Trade Unions (Cosatu) are also appealing on the grounds that local suppliers would lose business to foreign producers.

Three of South Africa’s government departments - the Department of Trade and Industry, the Department of Economic Development, the Department of Agriculture - Cosatu have filed a review and an appeal respectively. This appeal is scheduled to be heard in South Africa on 20 and 21 October.

Retailer Massmart has 315 stores in 13 countries in Africa. This includes 188 stores in South Africa, three in Namibia, nine in Botswana, two in Lesotho and one in Mozambique.

The establishment of a supplier development fund made available by Wal-Mart and Massmart was one of four voluntary conditions agreed to during South Africa’s competition tribunal hearing. The tribunal ruled the deal could go ahead if the company spends R100 million (US$14.1 million) sourcing local products over the next three years. A spokesman for Massmart told SM the specifics of the development fund had yet to be worked out.

From 1 September, Mcane Mthunzi, the CEO of the Consumer Goods Council of South Africa, will start a new role as Massmart’s supplier development executive this week. He will be responsible for managing the supplier development fund and working with local manufacturers and farmers.

At a conference scheduled for next week, Mthunzi will meet with around 2,000 potential suppliers to discuss how they can benefit from the fund to grow their business globally through Wal-Mart. Grant Pattison, Massmart CEO, said that despite the appeals, “the process of integration” with Wal-Mart had begun.

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