On 9 October 2012 the Competition Appeal Court (CAC) handed down its judgment in SACCAWU's appeal against the Competition Tribunal's conditional approval of the acquisition by Wal-Mart of a controlling interest in Massmart.

The decision follows the CAC's earlier judgment of 9 March 2012, in which the court ordered that a study should be commissioned to investigate the impact of the merger on SMMEs. The study also concerned the way in which the supplier development fund, which had been volunteered by the merger parties, should be funded and administered.

The CAC considered the reports submitted by Professor Mike Morris, who was appointed by the merger parties, and Professor Joseph Stiglitz and Mr James Hodge, who were appointed by the Government and SACCAWU. It consequently decided to increase the amount to be contributed by the merger parties to the fund from the initial ZAR 100 million ordered by the Tribunal, to ZAR 200 million.

The CAC also decided that, contrary to the claims by Government and SACCAWU, the fund should be administered by the merger parties alone, but in consultation with an advisory board comprised of representatives from the merger parties, Government, SACCAWU and the SMME Forum. The CAC held that the Competition Commission would, in the normal course of exercising its duty to monitor the conditions imposed on the merger parties, as well as the risk that any breach of such a condition could result in the revocation of the merger approval, act as a sufficiently transparent oversight mechanism.

The CAC further emphasised that while Government and SACCAWU may have had legitimate concerns regarding the displacement of local manufacturers and suppliers, competition policy cannot be a replacement for other, more appropriate, action in the furtherance of industrial policy.

To read the judgment, click here.

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