18 May 2011 | Lindsay Clark
Wal-Mart has made a R100
million (US$14.5 million) commitment to local suppliers in its proposed merger
with South Africa’s Massmart, but says it could walk away
from the deal if specific procurement targets
suggested by the country’s government are imposed.
In the summing up of the tribunal hearing adjudicating the
proposed merger, legal representatives for Wal-Mart, one of the world’s largest
retailers, said that the imposition of local procurement targets could jeopardise
Such conditions “would force the merging parties either to
appeal such conditions or reluctantly to walk away from the transaction if they
were imposed,” said Jeremy Gauntlett, the companies’
legal representative at the tribunal.
Meanwhile, Wal-Mart has proposed a three-year R100 million (US$14.5
million) supplier development fund as a gesture of goodwill if
the proposed merger is approved by the Competition Tribunal.
International CEO Doug McMillon said: “We continue to believe the proposed
merger will increase competition and benefit the stakeholders related to this
transaction. In an effort to increase the comfort of those involved, we feel
that these proposed commitments demonstrate our good faith and will allow us to
collectively serve customers in South Africa and help them save money and live
a better life.”
representative Rafik Bhana said that the government’s argument, that the
tribunal should consider the public interest in the merger, related not to the US
supermarket’s foreign ownership, but “Wal-Mart’s foreign procurement patterns”. He said that
to suggest the government view the merger on the basis of claimed savings
for South African consumers without considering the impact of procurement
strategy on the local economy was a “really a shortsighted and irresponsible view”.
Massmart controls a number of South African retailers including Makro, Builders Warehouse and Jumbo.