Massmart had violated one of the key conditions of its merger with US giant Walmart, which entailed the reinstatement of 503 workers dismissed prior to the merger of the retail giants, the Competition Commission said yesterday.
The commission said Massmart had reinstated only 244 of the retrenched workers and was required to rehire more. “The remaining number is in dispute.”
It had informed Massmart of its apparent non-compliance with the Competition Appeal Court’s order with respect to the reinstatement condition and had issued a notice of apparent breach.
Walmart, the largest retailer in the world, merged with the owner of Game and Makro in a $17 billion (R171bn) deal after concerns from the government that the former’s presence in the local market would disadvantage local businesses.
The Competition Tribunal imposed two conditions on the merger after it ruled that although it did not raise competition concerns, the merger did raise public interest concerns.
The tribunal ordered Massmart to give preference to the retrenched workers when employment opportunities arose, and to set up a R200 million supplier development fund to include small businesses in its supply chain.
Globally, Walmart employs about 2.2 million people and Massmart about 31 000.
The disputes regarding the reinstatements have been ongoing but in July the commission issued Massmart with a notice of apparent breach, giving it 10 working days to respond. Massmart could either submit a plan to remedy the breach or ask the tribunal to review the breach on the grounds that “the firm has substantially complied with its obligations with respect to the approval or conditional approval of the merger”.
The commission said it could not impose penalties on Massmart as it was only an investigative body. It said if the need arose, it would “refer the matter to the tribunal and recommend the imposition of appropriate penalties”.
Brian Leroni, the group’s corporate affairs executive, said offers of reinstatement to all 503 retrenched workers were made and those who presented themselves had been rehired.
In 2012, Massmart ran an advertising campaign and wrote letters appealing for workers to be reinstated. Leroni said the letters were “sent via registered mail to known addresses”. The reinstatement process ended in July 2012.
He said 239 employees who reported to work were reinstated and death benefits paid out to those who were known to the company.
“Despite our reinstatement strategy having been completed, Massmart remains prepared to consider for reinstatement any of those retrenched employees who can show good cause for not accepting our original offers of reinstatement,” he said.
The South African Commercial, Catering and Allied Workers Union would not comment but Mduduzi Mbongwe, the deputy general secretary, told Business Report last month that Massmart said it did not know 50 of the workers, but later that number dropped to 10. He said the union compiled a document detailing current addresses and proof that they were former employees.
“I’m doubtful that the merger would be reversed or upset if Massmart is not compliant,” said Paul Coetser, head of competition law at Werksmans Attorneys.
He said in the worst-case scenario a fine may be imposed on the merged entity.
“I don’t think Massmart or Walmart will get itself into a position where they will be found in contravention of the conditions placed on them.
“The Competition Commission might ask the company to ameliorate any negative consequences.”
One former employee, who had not been reinstated and did not want to be named, said he still had hope that he would be rehired. “I’ve been having hope for the last two years. I must be honest, it doesn’t look that good for us,” he said.
“It’s very frustrating; people have lost their marriages and their houses.”
He said it was unfair that Massmart was opening its stores and hiring other employees while there was still a “strong case” against it.
Massmart shares yesterday closed at R173, an increase of 2.9 percent from Monday.