Gautengers unite as discord takes toll on road plan

Time of article published Feb 27, 2011

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Perhaps the last time South Africans were so united across the political spectrum was when Acting Judge Leslie Weinkove of the high court called writer Ronald Suresh Roberts “haughty, arrogant, self-important, a name-dropper, excessive, outlandish, vindictive, venomous, relentless, evasive, argumentative, opportunistic, unconvincing and untruthful”.

On that occasion in 2007, the acting judge found the writer had not been defamed by the Sunday Times three years earlier. The judgment triggered national rejoicing, Suresh Roberts having managed to antagonise the length and breadth of South Africa.

On this occasion the geographical unanimity is confined to Gauteng, where a new toll road system is scheduled to come on stream in June.

However, opposition to the tolls has come from trade union federation Cosatu, AfriForum, the DA, the provincial ANC, the AA, the SACP, the Freedom Front Plus and Business Unity SA – an unlikely coalition of forces.

The plan, which has been in the pipeline since 2002, is excellent. It involves creating toll expressways on the Western Bypass in Johannesburg, the Eastern Bypass around Johannesburg International Airport, the Ben Schoeman Highway, the Eastern Bypass in Pretoria and the R21 airport freeway. And it includes widening the roads to four lanes in each direction.

However, Gauteng commuters have only just woken up to the fact that to use the system will cost an arm and a leg. Depending on the vehicle, travellers using an e-tag on the 185km freeways will pay between 30c and R2.97 per kilometre.

Why it took so long for the penny to drop is unclear. SA National Roads Agency chief executive Nazir Alli says the tolls went through all the proper processes and were accepted by Parliament. But opponents of the tolling charges says there has been insufficient consultation.

Once again there has been a painful breakdown in communications over critical issues. Somehow South Africa seems doomed to play an endless game of broken telephones.

Massmart

The Competition Commission’s non-confidential report on the proposed acquisition of control of Massmart by Wal-Mart Stores is a tad disappointing and hopefully is not an indication of what is to come at the Competition Tribunal next month.

Hearings at the tribunal have tended to involve vigorous analysis and exploration of aspects of the economy that are generally overlooked and they usually benefit from often tense interaction between battling parties.

So let’s hope the hearings are a little more vigorous and insightful than the commission’s report.

One disturbing aspect of the report was the amount of information blanked out on the grounds that it was confidential. How is it possible that someone was able to claim that the major shareholders of Massmart comprised a confidential group of people?

Massmart is a public listed company and the names of its major shareholders have long been in the public domain.

And what to make of the reluctance to disclose how much of Massmart’s sales are imported? This is information that Massmart itself has been willing to share with analysts and other members of the public.

Thus, while the group itself only imports 2 percent of the goods that it sells, that figure jumps to 40 percent if you include the goods bought from third parties who do the importing.

It might be that these third parties face the greatest threat of retrenchment from the proposed transaction. There would seem to be little point in Massmart continuing to use third parties to procure its goods when it can more easily use Walmart and benefit from its enormous buying power.

And then there’s the interesting suggestion that the commission may have attached conditions to its approval recommendation if it had not been for the fact that Economic Development Minister Ebrahim Patel was busy trying to get the merging parties and the unions to come to an arrangement. May the unions live to regret this? Page 3

Famous Brands

Famous Brands has been on a whirlwind acquisition trail in the past year, buying eight small business, which it is now bolting on to its existing infrastructure. It is not a bad plan as it means access to good sites and good brands. And it is getting a foothold in categories in which it does not yet have exposure.

Yesterday’s news of the latest acquisitions, Milky Lane and Juicy Lucy, seems to make sense, especially as the group has an ice cream manufacturing plant.

Furthermore, Milky Lane was started by Famous Brands founder George Halamandres about 50 years ago. So as Famous Brands chief executive Kevin Hedderwick said yesterday: “Milky Lane is coming home.”

Yet there is a possibility that with so many new brands under its wing – Keg, McGinty’s, O’Hagan’s, Giramundo, Vovo Telo, Black Steer and now Milky Lane and Juicy Lucy, all of which were bought in the past year – on top of its other big brands Wimpy, Steers and Debonairs, it may just have too much to focus on.

But to the critics Hedderwick points to other acquisitions the group has made that some considered at the time to be unwise. Tashas, which doubters said could not be franchised, has now successfully been expanded to seven stores.

There were those who were sceptical of the deal for Mugg & Bean, which Famous Brands bought in 2009, saying it had saturated its market, but it has grown from the 96 outlets at the time of the deal to 109.

The group is likely to put the brakes on its spending spree at least for a while as it consolidates its new businesses, grows them and of course keeps working on its stalwart brands. Page 4

Edited by Peter DeIonno. With contributions by Ethel Hazelhurst, Ann Crotty and Samantha Enslin-Payne.

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