## Facts

- Wal‑Mart Stores, Inc. (Wal‑Mart), the world’s largest retailer, sought to acquire a controlling interest in Massmart Holdings Limited (Massmart), a major South African retailer, as a means of entering the South African market.
- The Competition Commission investigated the proposed merger, found no substantial competition concerns, and recommended approval.
- Unions and small‑business groups opposed the merger, raising concerns about job losses and harm to local manufacturers and suppliers if Wal‑Mart used its global buying power to increase imports.
- Wal‑Mart voluntarily offered public‑interest undertakings intended to address these concerns, including:
  - a two‑year prohibition on merger‑related retrenchments,
  - a preference in hiring for workers previously retrenched by Massmart before the merger,
  - temporary recognition of existing collective‑bargaining arrangements, including SACCAWU’s representative status for a defined period, and
  - a commitment to some form of investment or support aimed at local manufacturers/suppliers.
- After considering objections, the Competition Tribunal conditionally approved the merger on 31 May 2011, incorporating Wal‑Mart’s undertakings into the approval order.
- SACCAWU (the appellant) appealed to the Competition Appeal Court, arguing that the competition authorities’ analysis relied too heavily on a consumer‑welfare approach and did not properly apply section 12A of the Competition Act 89 of 1998, which requires consideration of specified public‑interest factors (including employment and effects on particular industries and small businesses).
- A contested aspect of the record concerned a group of employees retrenched by Massmart before the merger; opponents contended that meaningful relief for these workers should form part of the merger conditions, while the merging parties disputed the claimed link to the merger.

## Issues

1. Under section 12A of the Competition Act, how must merger authorities weigh competition effects alongside the Act’s mandatory public‑interest factors (including employment and local industrial interests)?
2. Did the Tribunal err by treating consumer‑welfare and price effects as effectively decisive, and by accepting public‑interest conditions that were too general or insufficiently tied to identified risks?
3. What form of conditions (if any) may be imposed to address employment and local‑supplier concerns arising from a merger that does not materially lessen competition?

## Decision

- The Competition Appeal Court did not prohibit the Wal‑Mart/Massmart merger; it allowed the merger to proceed subject to public‑interest protections.
- The court held that section 12A requires a genuine consideration of public‑interest factors in merger control; those factors are part of the legal test and cannot be treated as optional or secondary to a narrow consumer‑welfare inquiry.
- The court found that aspects of the Tribunal’s public‑interest treatment—particularly the formulation of conditions aimed at local procurement/supplier concerns—required further work to ensure the remedies were concrete and capable of monitoring.
- The court varied the conditions relating to previously retrenched employees by requiring a more direct employment remedy (in substance, an obligation to offer re‑employment to the identified retrenched workers on terms that preserved prior service if they accepted), rather than only a general hiring preference.
- On local‑supplier and industrial concerns, the court required that the remedy be made more specific and workable, and directed further consideration and implementation steps so that any supplier‑support obligation would be defined, measurable, and enforceable.
- The matter was accordingly adjusted so the merger remained approved, but the public‑interest conditions were strengthened and, where necessary, sent back for proper formulation consistent with section 12A.

## Legal Principles

- Section 12A merger review requires both (i) a competition assessment and (ii) a determination whether the merger can be justified (or not) on substantial public‑interest grounds; the public‑interest inquiry is mandatory.
- Consumer welfare (including lower prices) is relevant but does not exhaust the statutory inquiry; merger authorities must also address the Act’s listed public‑interest factors, including employment and effects on particular industries and small firms.
- Where material public‑interest risks are plausibly raised, the Tribunal must deal with them on the record and may not rely on vague undertakings; any conditions must be clear enough to administer and monitor.
- Merger conditions must be connected to the merger and to the Act’s public‑interest factors; remedies should be framed so that compliance can be verified and enforced.
- The Competition Appeal Court may uphold a merger while varying or requiring reconsideration of conditions to ensure that public‑interest protections match the statutory scheme.

## Conclusion

SACCAWU’s appeal did not stop the Wal‑Mart/Massmart merger, but it resulted in the Competition Appeal Court reaffirming that section 12A requires real public‑interest analysis in addition to competition effects, and in the court tightening employment‑related relief and insisting on more definite, enforceable measures to address risks to local suppliers and related industrial interests.


South African Commercial Catering & Allied Workers Union v. Wal-Mart Stores, Inc., 111/CAC/Jun11 (March 9, 2012)