Wal-Mart’s hopes of having a Massmart deal tied up by early next year might be dashed if a reinforced SA Commercial, Catering and Allied Workers Union (Saccawu) was able to mount an effective challenge to the merger, a competition lawyer said yesterday.

He added that the “dead period” from mid-December to mid-January might also make it hard for the Competition Commission to speedily complete its probe into the transaction.

Because Wal-Mart is not operating in the country at present, the merger does not create any competition issues so the procedure through the competition authorities should be relatively straightforward. Under the Competition Act, the commission has 40 working days in which to investigate a merger. This can be extended by an additional 15 days if the Competition Tribunal agrees.

During the 40 days the commission will interview interested parties such as customers, suppliers and the merging entities. Given the nature of the deal, the two merging parties will be co-operative and keen to hasten the process. Customers are also likely to be readily available and supportive during the year-end dead period.

But it may be a little more difficult to get the suppliers to respond speedily, particularly if they are apprehensive about Wal-Mart’s entry to the market.

While Wal-Mart has made much of the way that it develops partnerships with its suppliers, it is likely that some suppliers will have concerns about its legendary ruthless approach to suppliers who do not meet its exacting demands. Apprehensive suppliers are unlikely to go public with their concerns, given the consequences of alienating a powerful player such as Wal-Mart, but they might be prepared to share them with the commission.

Before it makes a recommendation to the tribunal, the commission will also have to get submissions from Saccawu.

On the basis of its analysis of all the data, the commission will then make a recommendation to the tribunal. Given the transaction’s nature, the commission is expected to recommend that the merger be approved.

The only uncertainty is whether the commission will attach conditions to the approval.

Once the commission has issued its recommendation, dates will be set for the tribunal hearing, at which the unions will have the chance to present their case. Generally that participation has been limited to the reading of a prepared submission.

One notable exception was the recent merger between Momentum and Metropolitan Life, at which the union’s legal counsel made a significant impact and secured conditions from the tribunal.

This time around, Saccawu is believed to have already engaged legal counsel and is receiving support from affiliated unions around the world who have first-hand experience of Wal-Mart in action. Wal-Mart has repeatedly said it was “respectful of the union arrangement in South Africa” and that “we will respect the local legislative environment”.

It is also likely to allude to plans to grow the Massmart business, which would have positive job implications for Massmart. In this context, Saccawu will have to be very strategic if it hopes to persuade the commission and the tribunal of the appropriateness of attaching conditions to the merger.

To the extent that it is strategic in its approach before the tribunal, Saccawu will also contribute to extending the timeline beyond early next year.- Ann Crotty