Wal mart goes south case study

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Wal mart goes south case study

The Tribunal found that the merger raised no competition concerns although it did raise certain public interest concerns which could, however, be adequately remedied by the imposition of conditions which had initially been submitted as undertakings by the merging parties being first and second respondents and which were then made part of the order granted by the Tribunal.

For the sake of clarity, retrenchments do not include voluntary separation agreements or voluntary early retirement packages, and reasonable refusals to be redeployed in accordance with the provisions of the Labour Relations Act,as amended.

The programme will be administered by the merged entity, advised by a committee established by it and on which representatives of trade unions, business including SMMEs, and the government will be invited to serve. The merged entity must report back to the Competition Commission annually, within one month of the anniversary of the effective date, about its progress.

In addition the merged entity must establish a training programme to train local South African suppliers on how to do business with the merged entity and with Wal-Mart. The Ministers brought a review against the proceedings which took place before the Tribunal, based on the essential contention that the parties did not have a fair hearing before the Tribunal.

Wal mart goes south case study

Accordingly, if this court is to find in their favour, they contend that the decision of the Tribunal should be set aside and the matter should be referred back to Tribunal without the merits being determined on appeal.

The Ministers contend that, only if they were to fail in their review application, would it be appropriate for this court to hear and determine the merits of the dispute.

It is the largest retailer in the world. Its operations include three retail formats in the form of discount stores, super centres which contain products such as bakery goods, meat and dairy products, fresh produce, dry goods and staples, beverages, deli food, frozen food, canned and packaged goods, condiments and spices, household appliances and apparel and general merchandise, and finally neighbourhood markets which sell a variety products that are also offered by its super centres.

Prior to the merger, Wal-Mart had a very limited interest in the South African market. IPL does not directly or indirectly control any other firm but purchases fresh fruit produce in South Africa for the export market.

It appears that none of these products are then resold into the South African market. This public debate about Wal-Mart notwithstanding, it is important to emphasise at the outset that this Court can only and must assess the arguments by the intervening parties through the prism of the evidence and materials which formed part of the record before the Tribunal.

It controls in excess of ten subsidiaries which operate both within South Africa and in other parts of the African continent. It is both a wholesaler and retailer of grocery products, liquor and general merchandise. It has four divisions namely Massdiscounters, Masswarehouse, Massbuild and Masscash.

The Massdiscounters division trades under the name of Game and Dion Wired. Game offers a wide range of general merchandise and non-perishable groceries to customers in the 1 LSM category both throughout South Africa and Sub-Saharan Africa.

The Massmart food and grocery business focuses on low end customers predominantly at the wholesale level and through its Masscash division, where it sells directly to customers. These sales take place predominantly to consumers in the LSM categories. It is this transaction which gave rise to the hearings before the Tribunal during May and which culminated in the decision of the Tribunal, its reasons being given on 29 June In summary, the Tribunal held that it was common cause that the merger did not raise any competition concerns, in that Wal-Mart did not compete with Massmart in South Africa and its only presence in this country was its procurement arm of IPL which did no more than purchase South African produce for an export market.

Accordingly, the Tribunal found that the transaction did not prevent or lessen competition in any of the markets in which Massmart operated. In particular, s 12 A 3 read together with s 12 A 1 provides that the initial consideration of the merger must consist of an examination of whether the merger is likely to substantially prevent or lessen competition by an examination of the factors set out in s 12 A 2.

Once that enquiry has been completed, and if it then appears that the merger is likely to substantially prevent or lessen competition, a determination must be made whether or not the merger is likely to result in any technological, efficiency or other pro-competitive gain which will be greater than the losses and thus offset the effects of the prevention or lessening of competition that has already been found to exists pursuant to the initial enquiry.

Further, and irrespective of the findings in relation to these considerations, the Competition Commission or Tribunal must consider whether the merger can or cannot be justified on substantial public interest grounds. Whether or not the merger is likely to substantially prevent or lessen competition; 2.

If the result of this inquiry is in the affirmative, whether technological, efficiency or other pro-competitive gains will trump the initial conclusion so reached in stage 1 together, with the further consideration based on substantial public interest grounds, which in turn, could justify permitting or refusing the merger; and 3.

Notwithstanding the outcome of the enquiries in 1 or 2, the determination of whether the merger can or cannot be justified on substantial public interest grounds. The legislature sets out specific public interest grounds in s 12 A 3: The public interest inquiry may lead to a conclusion that is the opposite of the competition one, but it is a conclusion that is justified not in and of itself, but with regard to the conclusion on the competition section.

Wal mart goes south case study

It is not a blinkered approach, which makes the public interest inquiry separate and distinctive from the outcome of the prior inquiry. Yes, it is possible that a merger that will not be anti-competitive can be turned down on public interest grounds, but that does not mean that in coming to the conclusion on the latter, one will have no regard to the conclusion on the first.

It is not used in the sense that the merger must be justified independently on public interest grounds.

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Rather it means that the public interest conclusion is justified in relation to prior competition conclusions. In short, SACCAWU would not hold the same attitude to the proposed merger if the primary acquiring firm were another international retailer.

Reinstatement of retrenched employees [18] SACCAWU contended that workers had been dismissed prior to the merger but that, on the evidence, these retrenchments had been effected in anticipation of the merger.

SACCAWU contended that the Tribunal should impose a condition which would order reinstatement or reemployment of all these affected employees, the alternative being that the dismissed employees should be the first to be hired as employment opportunities arose within the Massmart group.

Collective Bargaining [20] A number of issues were raised by the unions under this rubric, although it appears that, when argued before the Tribunal, two central conditions were proposed, namely that Massmart become the subject of a closed shop agreement and that there be group centralised bargaining to streamline labour relations and reduce the comparative advantage enjoyed by Massmart from the present set of collective agreements spread across its divisions.

For these reasons, the Tribunal found that the creation of what would be an additional right not presently enjoyed by the unions was neither merger specific nor appropriately connected to the limited public interest mandate contained in s 12 A 3.

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Procurement [22] This issue prompted the leading of a considerable amount of evidence, the core of which will be analysed presently. Suffice at this point to note that, on the basis of this evidence, the argument was raised both by the Ministers and the unions that the result of the merger would be a significant shift in purchasing away from South African manufacturers towards foreign low costs Asian producers, which would in turn have a significant impact upon small and medium sized businesses within South Africa and a further consequent loss of jobs.

The Tribunal found that in order to impose procurement conditions, there would be a need to determine the local procurement levels of Massmart pre-merger and then hold it to this level for some period in the future.

Further, there was no rational basis for determining the period in which the procurement conditions should operate.Analysis of Walmart's expansion in South Africa and the acquisition of Massmart Your message goes here Post.

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South Africa Massmart is a South African-based globally competitive regional management group, invested in a portfolio of differentiated, complementary, focused wholesale and retail formats.

Walmart acquired a majority stake in .

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