The competition principles set out in the Competition Act are of paramount importance

Walmart hearing may launch debate on new laws

RETAILER NEWS

Business Day - Jul 14th 2011, 10:45

LOCAL competition attorneys plan to use next week’s parliamentary hearing into Walmart’s takeover of Massmart as an opportunity to warn against meddling with the country’s antitrust legal framework. 

The Competition Law Committee of the Law Society of the Northern Provinces plans to make a submission — despite the short notice given — committee chairman Paul Coetser said yesterday.

"The competition principles set out in the Competition Act are of paramount importance," Mr Coetser said. "Those are what competition authorities should first and foremost look at and Parliament should be loath to expand the category of public interest considerations. If government does that and tries to pursue other industrial policy objectives through the competition authorities, lines can be crossed and wrong message can come out at other end."

There is little chance of the portfolio committee on economic development ordering changes to the Competition Tribunal’s approval in May of Walmart’s takeover of local retailer Massmart. However, it is possible the committee could use the hearings it has called next week as a springboard for new legislation changing the rules.

In his February state of the nation address, President Jacob Zuma said the government would continue with reforms "to strengthen the Competition Act to open the market to new participants".

The hearing set for next week — with the window for public comments only open this week — is galvanising arguments on all sides. While labour groups such as the South African Commercial Catering and Allied Workers Union have said they will use the hearing to highlight the risks they see to the wider economy — from Massmart’s likely increase of imported goods at the expense of local production — others are rallying to support the tribunal’s judgment.

Business Unity SA (Busa) yesterday described the tribunal’s judgment — with conditions including a freeze on retrenchments and the creation of a R100m fund to nurture suppliers — as a "pragmatic solution" to "a very complex scenario".

Walmart’s control of Massmart would boost competition in retail and support the government’s New Growth Path economic policy, which seeks to create jobs and boost growth, the lobby group said.

"The laws governing foreign investment of any type should be clear, predictable and transparent. The timelines involved should also be as short and predictable as possible. The Walmart hearings fell short on this score. In future, SA needs to ensure that no foreign company is surprised by the number, type and timing of procedures and conditions required before an acquisition is formally approved," it said.

No single company should be a cause for new laws, Mr Coetser said. "One hopes that Parliament does not focus on individual transactions or individual companies, but more broadly on economic or competition policy," he said.

Retail giant Walmart in November made a R16,5bn cash offer to acquire 51% of Massmart at R148 per Massmart share,