Home News S.African anti-trust court orders study into Wal-Mart merger

S.African anti-trust court orders study into Wal-Mart merger

Published on 09/03/2012

South Africa's anti-trust appeals court on Friday dismissed a government bid to set aside a merger between retail giant Wal-Mart and Massmart but ordered a study into how local suppliers will benefit.

“The court has taken the rather unsual step in this case not to refer this back to the (competition) tribunal,” Judge Dennis Davis told the Competition Appeal Court of South Africa.

The court ruled against an application by three government ministers to review and set aside the merger approval of last May for Wal-Mart’s 16.5 billion rand (dollars, euros) purchase of a 51-percent stake in local chain Massmart.

However, it ordered that a study by three experts be completed within three months to investigate how local small and medium-sized businesses cold participate in Wal-Mart’s global value chain and ensure they reap benefits from the merger.

The merging parties have agreed to a 100 million rand fund to develop local suppliers but the court found that there was not enough details on how this would work and if it would fulfil required protections for the public interest.

“The court will then be empowered to formulate the mandate and the conditions by which such a fund or similar proposal would operate,” stated a summary statement of the ruling.

South Africa’s powerful trade unions have sharply criticised the deal, saying Wal-Mart’s entry would hurt local manufacturers by increasing imports.

Massmart runs nine wholesale and retail chains with 288 stores in 14 African countries.