Union to appeal over nod for Massmart merger

The South African Commercial, Catering and Allied Workers Union late on Monday, 27 June 2011, filed notice with the Competition Appeal Court in Cape Town that it intended to oppose the tribunal's decision last month to approve the R16,5 billion deal with conditions the companies offered.

The notice jumps the gun procedurally, as appeals usually respond to the reasons behind the tribunal's ruling. The tribunal only published its reasons on Wednesday. Monday's notice is likely to be supplemented after the union sees the reasons.

Union officials did not respond to request for comment Tuesday.

In a statement late Tuesday, Massmart and Wal-Mart said the move would not stop them implementing the takeover, completed last week when Wal-Mart paid Massmart shareholders and named three directors to Massmart's board.

"This is not an unexpected development and the companies remain firm in their belief that the transaction rests on solid legal ground," the said.

The hurdle for the union will be to convince the appeal court that the tribunal's interpretation of what it needed to do to allay the public interest concerns about the takeover - primarily jobs - was wrong.

An appeal, should the union go through with it, could lead to any number of outcomes. The appeal court could agree with the tribunal's ruling or instruct it to hear the case - or aspects of it - again, taking specific points into consideration.

If the court agreed with the union it could force Wal-Mart to unwind the deal completely or to sell all or part of its stake in Massmart.

It could also, in theory, decide no conditions were warranted and declare the approval unconditional.

In its 31 May ruling the tribunal rejected union and government demands to impose an obligation on Massmart to stick to set levels of local procurement.

Rather, it said the companies had to set up - as they had offered - a R100m fund to develop and train suppliers to sell into Wal-Mart's procurement network. It also cannot retrench any staff for two years due to operational requirements, and has to give priority to 503 Game employees retrenched last year when rehiring. The union's status as representative of workers cannot be challenged for three years.

Massmart held its first board meeting yesterday, with new directors including Wal-Mart International CEO Doug McMillon. Wal-Mart will also be discussed at the Congress of South African Trade Unions central committee meeting in Midrand, where Philip Jennings, the secretary-general of the UNI Global Union federation, will speak.

Source: Business Day