Consequently wal mart is seen as an example of

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Unformatted text preview: of the possibilities of, and limits to, globalisation (Stiglitz, 2006). It has generated a lot of commentary from academics, business experts, trade unions, environmental groups, development practitioners, cultural activists, political activists, and many other interest groups wherever it operates or intends to operate. Unfortunately much of this commentary, from both detractors and supporters of Wal-Mart, is too one sided to stand academic rigour. 7 1.5 Entry into South Africa On 27 September 2010 Wal-Mart announced its intention to acquire Massmart stores of South Africa, marking its entry into Africa (Wal-Mart, 2011). Massmart is the fourth largest retailer in South Africa by revenue, with a growth strategy and store format strikingly similar to Wal-Mart’s (Financial Mail, 2011). Even though Massmart is smaller than its competitors in South Africa, it is one of the more successful retailers from an investment point of view. It has been aggressively growing especially in the lowerincome segment, primarily through acquisitions. Massmart is regarded as the more natural fit for Wal-Mart amongst South African retailers because of the similarities in their store formats (Financial Mail, 2011). Massmart also has its sights set on Africa. Its counterpart, Shoprite, was an early mover into Africa and its African operations have done extremely well. Massmart was very keen to sell to Wal-Mart as opposed to having Wal-Mart entering either by acquiring a competitor or through a greenfield strategy. They are of the view that their growth will accelerate with Wal-Mart on board (Pattison, 2011). Merger regulation in South Africa requires all large mergers, such as the one between Wal-Mart and Massmart, to be notified to the Competition Commission. The Commission must, after assessing the merger, make a recommendation to the Competition Tribunal on whether to approve the merger unconditionally, or to approve the merger with conditions; or to prohibit the merger entirely. The Competition Tribunal, after a public hearing involving at least the merging parties and the Commission must then take a decision on the merger. The decisions of the Tribunal may be appealed or reviewed by the Competition Appeal Court, and thereafter, if necessary, the matter will proceed through the normal court hierarchy. 8 The Competition laws further allow for employee representatives such as trade unions to be notified of the transaction and to make submissions before the competition authorities. Similarly, the government, through the Minister of Economic Development, must be notified of the transaction and may elect to make submissions on public interest grounds. Furthermore, any interested party who feels that his or her interest will not be represented during merger proceedings may apply to intervene in the proceedings before the Tribunal, which application may or may not be granted. From a competition law perspective the acquisition of Massmart by Wal-Mart was uncontroversial as Wal-Mart did not have any stores in the country, and thus the transaction would have no immediate impact on competition in South Africa. However, competition law in South Africa requires competition authorities to consider, in addition to competition issues, the public interest issues emanating from a merger. The Competition Act, 1998 (Act No. 89 of 1998, as amended) provides that in assessing public interest issues, the competition authorities must consider the impact of a merger on: A particular industrial sector or region; Employment; Small businesses or firms owned by historically disadvantaged groups; and Ability of local industries to compete in international markets. As can be observed above, the South African regulatory framework is quite permissive of stakeholders such as trade unions, consumers and government participating in merger proceedings. Armed with these provisions, the following stakeholders objected or sought conditions to the Wal-Mart acquisition of Massmart when it came before the competition authorities: 9 South African Commercial, Catering and Allied Workers Union (SACCAWU): SACCAWU is a majority trade union at Massmart in South Africa. Southern African Clothing and Textile W orkers’ Union (SACTWU): SACTWU is the largest clothing and textile trade union in South Africa. The sector has long been declining in South Africa with many jobs being lost. SACTWU has been at the forefront of preserving jobs in the sector. Its interest in the matter is primarily the effect of Wal-Mart merger on textile and clothing manufacturing jobs. Food and Allied Workers Union (FAWU): FAWU organises in the food sector in South Africa. Its primary interest on the matter is the impact of Wal-Mart entry on jobs in the food and agro-processing value chain. National Union of Metal Workers of South Africa (NUMSA): NUMSA is the biggest metal workers’ union in South Africa and one of the biggest and most influential of COSATU affiliates. Its primary interest is on the impact of the entry of Wal-Mart on jobs in the sector. Congress of South African Trade Unions -...
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This document was uploaded on 01/24/2014.

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