On 9 October 2012 the Competition Appeal Court (CAC) handed down
its judgment in SACCAWU's appeal against the Competition
Tribunal's conditional approval of the acquisition by
Wal-Mart of a controlling interest in Massmart.
The decision follows the CAC's earlier judgment of 9 March
2012, in which the court ordered that a study should be
commissioned to investigate the impact of the merger on SMMEs. The
study also concerned the way in which the supplier development
fund, which had been volunteered by the merger parties, should be
funded and administered.
The CAC considered the reports submitted by Professor Mike Morris,
who was appointed by the merger parties, and Professor Joseph
Stiglitz and Mr James Hodge, who were appointed by the Government
and SACCAWU. It consequently decided to increase the amount to be
contributed by the merger parties to the fund from the initial ZAR
100 million ordered by the Tribunal, to ZAR 200 million.
The CAC also decided that, contrary to the claims by Government
and SACCAWU, the fund should be administered by the merger parties
alone, but in consultation with an advisory board comprised of
representatives from the merger parties, Government, SACCAWU and
the SMME Forum. The CAC held that the Competition Commission would,
in the normal course of exercising its duty to monitor the
conditions imposed on the merger parties, as well as the risk that
any breach of such a condition could result in the revocation of
the merger approval, act as a sufficiently transparent oversight
mechanism.
The CAC further emphasised that while Government and SACCAWU may
have had legitimate concerns regarding the displacement of local
manufacturers and suppliers, competition policy cannot be a
replacement for other, more appropriate, action in the furtherance
of industrial policy.
To read the judgment,
click here.
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