| Thu 15 Mar 2012, 12:12 | | MSM - Massmart Holdings Limited - Update on Process with Competition Authorities |
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MSM
MSM
MSM - Massmart Holdings Limited - Update on Process with Competition Authorities
Massmart Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration Number: 1940/014066/06)
Share code: MSM
ISIN: ZAE0000152617
("Massmart" or "the Company")
Update on Process with Competition Authorities
Shareholders are referred to the judgment of the Competition Appeal Court of
South Africa ("the CAC") released on 9 March 2012 concerning the merger between
Massmart and Wal-Mart Stores Inc. ("Walmart" and, together, "the merging
parties"). The judgment is publically available but, for convenience, a copy
can be accessed on the Massmart website (www.massmart.co.za).
Subsequent press coverage of the judgment has been extensive but the main points
to be highlighted include:
- The Massmart / Walmart merger has now been approved by all three of the
South African Competition Law Regulators (being the Competition Commission,
the Competition Tribunal and the CAC);
- The review brought against the Competition Tribunal`s decision by the
Ministers of Economic Development, Trade & Industry, and Agriculture,
Forestry & Fisheries ("the Ministers") was dismissed, with costs awarded
against the Ministers;
- The CAC confirmed two of the conditions contained in the Competition
Tribunal`s decision of 31 May 2011, which had been voluntarily offered by
the merging parties during the hearings (including an obligation to ensure
that there are no retrenchments resulting from the merger for a period of
two years; and an obligation to honour existing labour agreements and not
to challenge SACCAWU`s position as representing bargaining units within
Massmart for at least three years);
- The CAC ordered the reinstatement of the 503 Massdiscounters employees
retrenched during 2009 and 2010. While the practical implications of this
order are unclear at this stage and are being considered by our legal team,
Massmart respectfully disagrees with the CAC`s finding that there appeared
to be a relationship between those retrenchments and the merger; and
- With regard to the R100 million Supplier Development Fund proposed by the
merging parties and accepted by the Competition Tribunal, the CAC ordered
the commission of a study by three experts, one to be appointed by each of
the merging parties, the Ministers and SACCAWU respectively, 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".
The experts must be appointed within a month of the judgment date (9 March
2012) and their report circulated within three months of the same date. At
that point, the parties involved have another month to make further
submissions to the CAC which will then formulate a condition, taking
account of the study and submissions, as to the "programme to be
established for the development of local South African suppliers".
The costs of the study are to be borne by the merging parties.
The merging parties look forward to engaging constructively with the CAC, the
Ministers and SACCAWU, and are hopeful that the study will support the
initiatives already underway through our Supplier Development Fund which has
been operational since June 2011.
It is difficult to be certain when the above process may reach finality, but
will likely only be in the latter half of 2012.
Johannesburg
15 March 2012
Sponsor
Deutsche Securities SA (Proprietary) Limited
Date: 15/03/2012 12:12:01 Produced by the JSE SENS Department.
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