Dire warnings on Walmart

The adversaries in the Competition Tribunal hearings on Walmart's bid for Massmart will put their concluding arguments today amid renewed union threats of protests and warnings that blocking the deal will deter investment.

After today, the tribunal will have 10 days in which to decide whether to approve the deal, with or without conditions.

Massmart CE Grant Pattison says he is confident that the R16.5-billion deal will get the nod, despite the forces ranged against it and fears that Walmart will cut jobs and shift procurement away from local manufacturers to cheaper suppliers in China.

''It's been fantastic to get the opportunity to present our case to the Competition Tribunal and I think what is most telling is that no one - not the government, not our unions, not our competitors - has disputed the fact that this transaction will be good for consumers, and . that we'll be able to bring prices down,'' Pattison said.

Massmart and Walmart insist that the deal will lower prices.

Massmart stores include Game, Dion Wired, Makro, Builders Warehouse and Masscash.

Lawyers have warned that the government might not have a basis in law to impose terms on Walmart.

The Sunday Times yesterday quoted Paul Kruger, of the Trade Law Centre for Southern Africa, as saying the government would breach the 1994 General Agreement on Trade in Services if it blocked the US giant's entry or imposed conditions different to those imposed on other retailers.

Just how prices will be cut remains a mystery, says a report by James Hodge, of Genesis Analytics, an economist acting for government departments.

''The merging parties at no point have any concrete claims as to how prices will move post-merger and hence suggestions [about consumer benefits] remain unsubstantiated,'' he said.

Walmart's executive vice-president, Andy Bond, told the tribunal that Massmart would have access to Walmart's global procurement services but that did not mean that there would be a significant change in its procurement practices.

He said local procurement typically had the advantage of lower hard-goods net costs, given lower transport and logistics expenses.

But this did not placate Shoprite, whose witness on Thursday reiterated CE Whitey Basson's import threats made earlier this year.

Gerhardus Ackerman, Shoprite's director of food buying and imports, said that if Walmart entered the local market Shoprite would have to rely on cheap imports to compete.

RBB Economics co-founder Simon Baker, retained by Walmart and Massmart to present views on the economic effect the merger would have in South Africa, said it would deliver considerable "welfare benefits".

Rafik Bhana, for the government departments, said RBB Economics' report was "superficial".

Cosatu said on Friday that it would resort to "protest action" if the deal were approved without conditions.

The union federation said that Walmart could "force its suppliers to lower prices in its quest to be seen as benefiting consumers through lower prices with disastrous consequences to jobs in the companies supplying it". It wants conditions imposed on the deal to ensure that its members' rights are protected. - I-Net Bridge