The first day of the Competition Tribunal hearing on US-based Wal-Mart Stores’ proposed R16.5 billion acquisition of 51 percent of local consumer goods company Massmart focused largely on two issues.

Paul Kennedy, the advocate representing the SA Commercial, Catering and Allied Workers’ Union, yesterday questioned Massmart chief executive Grant Pattison on the timing of last year’s retrenchment of more than 500 workers from the company.

Later in the day, Rafik Bhana, SC for the Departments of Trade and Industry, Economic Development, and Agriculture, attempted to establish the impact on imports.

The parties were challenging the recommendation by the Competition Commission in February to let the deal go ahead unconditionally. The tribunal hearing is due to run until next Monday. The unions are opposed to the merger because they argue Walmart has a reputation for taking a tough stance with organised labour and treating workers harshly.

Pattison said whatever Walmart’s reputation in the US, it would comply with the norms of the countries it operated in.

Referring repeatedly to documents not open to public scrutiny, Kennedy interrogated Pattison about the timing of communications between Walmart and Massmart, in an attempt to link it to retrenchments in February last year.

He asked whether Massmart, knowing the US company had “a rigorous approach to cost structures particularly labour costs”, wished to make itself “more attractive as a potential target”. Pattison denied this was the case.

Pattison argued that the merger would in fact promote job growth, making it easier for the company to expand. He said Massmart was planning to increase floor space by 8 percent this year, 8 percent next year and 5 percent in 2013. He said floor space was the best proxy for employment, with 20 percent growth in floor space likely to generate 15 percent growth in employment.

He was quizzed on whether the recent re-engineering of Massmart’s regional distribution centres was undertaken in the hope of a bid by Walmart.

Pattison noted: “Our competitors have been doing exactly the same thing. You are identifying global trends and trying to see it as Walmart-related. Any mass merchant will look to the global leader and do (what the leader is doing) to the best of their ability, particularly when they may soon be one of your competitors.”

He was referring to the possibility that Walmart may have made a bid for another company or set up a greenfields venture that would have been in competition with Massmart.

In response to questions by Bhana about the impact of imports on local industry, Pattison argued that imported goods obtained through Walmart’s procurement network would probably be largely replacements for existing imported goods.

Azar Jammine, the chief economist of Econometrix, said although the concerns by trade unions about potential job losses were valid, “it’s hard to see what checks could be put in place to avoid it”.

Other witnesses include Andy Bond, former executive vice-president of Wal-Mart Stores, and Enrique Cambiaso, the chief executive of Walmart’s operations in Chile. - Business Report