South Africa: Competition Appeal Court Dismisses Review & Partially Upholds Appeal In Massmart / Walmart Merger

Last Updated: 16 March 2012
Most Read Contributor in South Africa, September 2018

Article by Mark Garden, Justin Balkin and Kirsty van der Bergh

Judge Dennis Davis, the President of the Competition Appeal Court ("CAC"), dismissed the application by the Minister of Economic Development, the Minister of Trade and Industry and the Minister of Agriculture, Forestry and Fisheries to review and set aside the decision of the Competition Tribunal (the "Tribunal") to approve Walmart Stores Inc's ("Walmart") acquisition of a 51% stake in Massmart Holdings Limited ("Massmart") (the "Tribunal's May decision").  At the same time, the CAC partially upheld the appeal launched by the South African Commercial, Catering and Allied Workers Union ("SACCAWU") against the Tribunal's May decision. 

In the review application, the Ministers argued that they had not enjoyed a fair hearing before the Tribunal, as the Tribunal had erred by refusing to order the discovery of a range of documents, and, by making certain scheduling decisions which ultimately precluded the intervening parties from fully and adequately addressing their concerns.

The CAC held that, in evaluating the Ministers' submissions, the applicable test was not what the court might have done itself in making scheduling and discovery decisions, but what a reasonable decision maker would have done, within the context of the Tribunal's mandate, its workload, expertise and the time available to it.  The CAC found the Tribunal to have acted as a reasonable decision maker and dismissed the Ministers' review application.

In the appeal, the CAC found that there was insufficient evidence to refuse the approval of the merger on the grounds that the merged entity would have a detrimental effect on small and medium sized businesses.  Indeed, the CAC found that the evidence indicated that consumers would benefit from lower prices as a result of the merger, and these lower prices could, in turn, lead to greater job creation. 

The CAC also rejected the proposition made by SACCAWU that a condition should be imposed whereby the merged entity would become the subject of group centralised bargaining and a closed shop agreement.  The Court emphasized that these benefits could not be obtained through competition law, especially in circumstances whereby it could not have obtained these protections through labour law, and accordingly these safeguards should be the result of negotiations between trade unions and the merged entity. 

The Court rejected SACCAWU's proposal that a limitation be placed on the merged entity's ability to import goods as such a condition would create distortions in the industry and be difficult to implement, especially when said condition would be imposed only upon the merged entity and not its competitors. 

The appeal was partially upheld in relation to SACCAWU's proposition that same 503 workers who were previously retrenched by Massmart should be reinstated by the merged entity.  The CAC held that the evidence indicated that the retrenchments were so closely linked to the merger and its timetable that they must have been merger-related.

The fourth condition imposed in the Tribunal's May decision, namely that the merged entity must establish a programme aimed exclusively at the development of local South African suppliers, including SMME's, funded in a fixed amount of R100 million, was held to be ineffective by the CAC.  The Court indicated that the R100 million fund proposed by the merged entity in the Tribunal hearings was accepted without sufficient interrogation as to how precisely the programme would be implemented.  In its judgment, the CAC indicated that it had no idea how the fund should work, whether it would be effective and indeed if R100 million was sufficient or not. 

The CAC accordingly ordered that a study be commissioned by three experts, representing the Ministers, SACCAWU and the merged entity.  The three experts must be appointed within one month of the CAC's decision, and will have a further two months in which to produce a report detailing how best to utilise the merged entity's supplier fund to the benefit of small and medium-sized South African suppliers and ensure that the benefits of the merger flow to this important sector of the economy.  Once parties have responded to the submissions, the CAC will be empowered to formulate the mandate and conditions by which the fund would operate, ensuring the advancement of the public interest.

Of the conditions imposed by the Tribunal, two were upheld and two were amended by the CAC.  Ultimately, the conditions imposed by the CAC are as follows -

  • the merged entity must ensure there are no merger-related retrenchments in South Africa for a period of two (2) years from the effective date of the transaction;

  • the merged entity must honour existing labour agreements and must continue to honour Massmart's current practice of not challenging SACCAWU's position as the largest representative union within the merged entity, for three (3) years from the effective date of the transaction;

  • the merged entity must reinstate the 503 employees who were retrenched by Massmart in 2009 and 2010 and must take into account the employees' years of service; and

  • the merged entity must commission a study to determine the most appropriate means together with the mechanism by which local South African suppliers may be empowered to respond to the challenges posed by the merger and thus benefit thereby.  In particular, the study shall canvass the best means by which South African small and medium-sized suppliers can participate in Walmart's global value chain training programmes that might be established to train local South African suppliers on how to conduct business with the merged entity and Walmart and the costs which would reasonably be incurred in so far as the development of such a programmes is concerned.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions