Cosatu has called on the Competition Tribunal to reject Walmart's planned acquisition of Massmart, spokesman Patrick Craven said on Monday.
“We urge the Competition Tribunal, which is holding a hearing this week, to reject the view of the Competition Commission which backed the deal...,” Craven said in a statement.
The Congress of SA Trade Unions, which is a member of the Anti-Walmart Coalition, in alliance with the UNI Global Union, a worldwide umbrella union representing 20 million workers, “reiterates its total opposition to the Walmart take-over of Massmart”, he said.
The Anti-Walmart Coalition - consisting of various trade unions, including the SA Commercial, Catering and Allied Workers' Union (Saccawu), SA Clothing and Textile Workers' Union (Sactwu), labour federation Cosatu and civil society organisations - opposes the deal because of the negative consequences it sees for Massmart workers, the wholesale and retail sector and its supply chains.
Craven said Cosatu regretted that Massmart shareholders had voted in favour of Walmart's bid to acquire 51 percent of Massmart for R148 a share in a deal worth around R17 billion.
“They ignored warnings, like that in the South African government's submission to the Tribunal, of thousands of potential job losses if the deal goes ahead without conditions.
“They estimate that as many as 4000 jobs from industries such as general merchandise - including clothing and footwear - and in food and beverage production could be lost if Massmart were to shift just one percent of its procurement from local to imported sources,” Craven said.
He was referring to a report government commissioned from consultancy Genesis Analytics, which says the wholesale and retail sector's contribution to gross domestic product would likely remain constant at about 12 percent, so any job growth coming from the merged entity would likely not increase the overall number of people in work, but would just take jobs from other retailers.
Craven also warned that Walmart was anti-union and quoted Christy Hoffman of UNI Global Union, as saying: “In many of the countries where Walmart workers have union representation, the company cuts back on the rights of workers at every opportunity.”
Cosatu demanded that the tribunal reject the proposed merger. If not, “Cosatu and its partners in the Anti-Walmart Coalition have vowed, in the words of the federation's first deputy president, Tyotyo James, 'to organise a mother of all boycotts against Massmart',” Craven said.
His comments came as the tribunal started its one-week of hearings in Pretoria while Walmart went on a public relations drive by launching a website dedicated to the deal.
“In the interest of ensuring the opinions of all South Africans are informed accurately, we have set up a website to answer questions that have been raised about this transaction,” Walmart said in a statement.
“We are excited about the opportunities this transaction represents for South Africans and hope that you find the information provided in this website useful.”
The website www.walmartinfo.co.za explains why Walmart wants to acquire a controlling stake in local retailer Massmart, which includes Game, Dion Wired, Makro, Builders Warehouse and Masscash. It also attempts to allay fears that the deal would lead to a loss of jobs and damage local procurement.
In a section titled “Creating Jobs”, Walmart said: “Last year, Walmart announced we would create 500,000 jobs around the world in the next five years.”
Walmart also gave reassurance on its union stance: “Walmart employs over two million associates worldwide and we have union relationships in around half of the countries in which we operate.”
Massmart CEO Grant Pattison told the hearing that the group's food retail sector would benefit the most from the proposed merger.
“To my mind, Massmart stands to benefit most in the food retail sector into which it has significant expansion aspirations,” he said in his witness statement prepared for the hearing.
Pattison said the deal would allow Massmart, which was the fifth largest participant in this sector but substantially behind the other four retailers, to “draw on the skills, systems and processes already developed, tried and tested by Walmart”.
The intervening parties - the departments of economic development, trade and industry, and agriculture, fisheries and forestry, Saccawu, Sactwu, and the SMME Forum - have argued the deal would strangle local suppliers if Walmart were to import cheap Chinese goods.
Pattison said although Massmart attempted to procure its products as cheaply as possible, its business was “premised on the assumption that all of Massmart's major competitors are able to procure goods from suppliers at substantially similar prices”.
“The differentiating factor, therefore, (over and above servicing customers better) is the ability to move the product from the factory floor to the store shelf more efficiently than its competitors, thereby obtaining a competitive advantage,” he said.
“As the acquisition of Massmart by Walmart will not have a material impact on these fundamental economic determinants, the basic procurement patterns currently seen within the Massmart business are unlikely to be changed significantly by the proposed transaction.
The hearings are set down for May 9 to 13. May 16 is reserved for legal argument.
The Competition Commission has recommended that the transaction go through with no conditions.
Walmart operates around the world, including Canada, Brazil, China, Chile, Japan and Mexico. It wants to buy the stake in Massmart to get a stake in emerging African markets. - Sapa