Wal-Mart – Trade Ministers Meet

Desie Heita

27 June 2011

Windhoek — Namibian and South African trade ministers are expected to meet today to strategise on what is to become the biggest corporate challenge ever in the region – dealing with American retail giant Wal-Mart.

The Namibia Competition Commission (NCC) is also bringing out big guns for the Supreme Court appeal, and the name of South African senior counsel Rafik Bhana has been mentioned.

Wal-Mart is going ahead with its merger with South African Massmart retail chain group, having won its case in Namibian courts, as well as a ruling by the South African competition tribunal that agreed on the self-imposed conditions.

The NCC is appealing the High Court ruling in the Supreme Court, while the South African Competition Commission is going back to the drawing board before it decides on the next move.

Both authorities feel that Wal-Mart, with its documented history of poor trade union and employee relations, ought to be given a clear script on how to engage in business in southern Africa, with clearly stipulated consequences if it fails to play by the rules.

The South African Competition Commission has requested a meeting with its Namibian counterpart and so did the South African government.

Namibian trade minister Hage Geingob is scheduled to meet the South African ministers of agriculture as well as of trade.

NCC Secretary Heinrich Gaomab II, told New Era that the commission’s feeling is that the High Court took away decision-making power from the commission, a body entrusted by legislators to deal with matters of acquisition and mergers.

“We are not happy with how the process was handled, we feel that the court, by granting merger with conditions, decided on our behalf,” said Gaomab II.

South African authorities share the same feeling hence the request for a consultative meeting with their Namibian counterparts.

The NCC is bringing out big guns, in the legal fraternity, sourcing from South Africa for the Supreme Court challenge.

“A much experienced senior counsel can only be fruitful for us, and South Africa is the best country to source such brains,” said Gaomab II.

Wal-Mart is best known for bashing unions, bullying its way into markets where it shuts down competition from smaller retailers with cheap imported goods, and for paying wages below the industry norm.

Such sentiments were amply demonstrated in New York, where Walmart is in court for issues related to paying female workers less than their male counterparts.

Protestors with placards bearing messages of Walmart practices picketed in the streets.

Walmart also has a presence in Canada, Brazil, China, Chile, Japan and Mexico. It now wants to enter the southern Africa markets and sees Massmart Holdings Limited as the correct route.

Massmart group has over 200 stores in South Africa, with a host of different brand names, and about 150 different stores in southern African countries. Common are Game, Makro, Windhoek Cash & Carry and Builders Warehouse.

Thus South Africa and Namibia want to ensure that Walmart’s infamous reputation does not follow the company when it finally takes ownership of Massmart group.

A major concern is based on Walmart’s global practice of sourcing its goods, which trade unions and Government fear would open the borders to a gigantic flood of cheap imports. This would eventually threaten existing suppliers.

South Africa did a study which found that nearly 5 000 South African jobs would be lost if, after the merger, Walmart starts importing just about a percentage of its goods.

Namibia is also not certain about the effects the merger would have on the country’s retailing sector and job market, hence it attached a number of conditions to the merger. These include “greater spread of ownership [by] historically disadvantaged persons,” ensuring that there is no employment losses, and that the merger does not create harmful effects on competition that may give rise to risk of the market becoming foreclosed to competitors.

The commission has also asked for an approval by the Minister of Trade and Industry for the transactions.

The Namibian High Court however ruled against such restrictions, granting permission for Wal-Mart to enter the country without any restriction.

The South Africa competition tribunal agreed with Wal-Mart’s submission.

AllAfrica – All the Time