Walmart ‘could seek WTO relief’

Time of article published Oct 24, 2011

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Ann Crotty

Walmart could approach the US government to seek World Trade Organisation (WTO) relief from any procurement conditions imposed on Walmart-controlled Massmart, Walmart’s lawyers said on Friday.

However, a spokesman for the US-based retailer said that although it was an option, “it has not been considered (by Walmart), and is not a requirement, at this stage”.

The possibility of procurement conditions being imposed on Massmart was one of many contentious issues discussed during the second day of the Competition Appeal Court’s (CAC’s) hearing of the appeal of the Competition Tribunal’s conditional approval of Walmart’s acquisition of 51 percent of Massmart.

Counsel for the merging parties, Walmart and Massmart, argued that procurement conditions could not be imposed as they would contravene WTO regulations.

The government’s counsel countered that they saw no violation of international law in the imposition of such restrictions, arguing that there was scope within the WTO framework to pursue the objective of redressing “negative economic effects of apartheid by promoting employment among historically disadvantaged groups”.

After the proceedings a number of analysts noted that, with an election coming up in the US, it was unlikely that President Barack Obama would concede to an approach from Walmart to use the legislative muscle of the WTO to challenge the South African government.

The appeal was brought by three government departments and the SA Commercial, Catering and Allied Workers’ Union (Saccawu). The departments asked for the case to go back to the tribunal.

CAC Judge President Dennis Davis as well as the government departments and Saccawu frequently argued that there was insufficient evidence from which to conclude what would be the merger’s likely effect on local procurement and therefore on the public interest.

The government and Saccawu argued that the effect was likely to be considerable and negative. They also argued that the burden was on the merging parties to produce the evidence proving that the conditions imposed by the tribunal would be sufficient to address the negative public interest effects.

The merging parties argued that the level of imports would not be affected by the merger and that a mandatory R100 million development fund would support small suppliers.

One analyst said after the hearings that such was the extent of disagreement on the likely impact on public interest that if the merger was sent back to the tribunal for consideration, the tribunal could well prohibit it on the grounds that it was too difficult to impose conditions that would address the public interest concerns.

Judge Davis noted that the government’s counsel had said the government wanted the merger to continue, which meant “this whole thing is about haggling for better conditions”.

Judge Davis suggested that Walmart would not be a threat to anyone “if we had a seriously competitive supplier sector”. He indicated that he was concerned about setting conditions that would merely result in perpetuating inefficiencies.

Saccawu’s counsel argued that the union’s demand for collective bargaining and a closed shop was justified by Walmart’s approach to labour.

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