Walmart has launched an urgent High Court application in Windhoek challenging the Namibian Competition Commission’s decision to impose local ownership conditions on Walmart’s proposed acquisition of Massmart’s operations in that country.
Walmart issued a press release yesterday in which it stated that “while approval has been received from four of the five countries outside of South Africa that require competition approvals, Namibia is the only jurisdiction to date to have imposed any material conditions”.
It added: “At this time, Walmart and Massmart are seeking clarity from the court on the legal basis with respect to the conditions imposed, specifically in respect of a condition that local ownership be required for Massmart’s current operations in Namibia, which consist of three stores.”
The four countries that have granted approval for the merger are Tanzania, Malawi, Swaziland and Zambia. Massmart has operations in 14 African countries outside of South Africa but only five of them have competition authorities.
Competition lawyers said yesterday that the legal action in Namibia would not directly affect the South African portion of the proposed merger assuming that Walmart-Massmart could ring-fence the Namibian part of the transaction.
“Massmart could sell off its Namibian operations or close them down,” one lawyer said.
A statement issued by the Namibian Competition Commission last week said that on November 26 it had received a merger notification related to the proposed transaction. “At the commission meeting held on February 8, 2011, the proposed merger between Massmart Holdings and Wal-Mart Stores was approved with conditions.” The statement provided no details on the nature of the conditions. But it added that on March 18 “Walmart launched an urgent High Court application challenging the merger determination issued by the commission.”
Massmart has only three stores in Namibia, two of which are Game stores, one located in Windhoek and one in Oshikati, and one Masscash store, located in Windhoek.
In July last year, Massmart’s proposed acquisition of Namibia-based hardware chain Pupkewitz Megabuild failed to go through as a result of a failure to reach agreement with the Namibian Competition Commission. That transaction would have added a chain of 16 hardware stores to Massmart’s Namibian portfolio.
Yesterday Massmart corporate affairs executive Brian Leroni said the company had wanted to implement a staff equity ownership dimension to the transaction but that it could not reach agreement with the local Competition Commission.
It also emerged yesterday that workers at some of Walmart’s Chilean operations had launched a 15-day strike. The workers’ complaints related to low wages and onerous working conditions. A statement issued by the recently formed union referred to the fact that since Walmart acquired a 75 percent stake in D&S, the Chilean retail operation, the country’s Labour Department had processed more than 40 fines against Walmart for violations of labour laws. page 12