Despite resistance from other SADC countries, the merger of Wal-Mart, the U.S giant retailer, and South Africa’s Massmart is expected to be smooth sailing in Botswana as the country is likely to see the deal from investment point of view.
After hearings, the competition regulator in South Africa gave Wal-Mart, the biggest retailer in the northern hemisphere, a go ahead to acquire 51 percent of Massmart for $2.4 billion (about P15.7 billion), but with conditions.
As for Botswana, it is only now that the Competition Authority is being set up and it might be late to listen to objections from those opposed to the proposed merger.
Massmart Holdings, the JSE quoted outfit, owns well known brands that include Game Stores, Makro and Builders Warehouse.
Thula Kaira, who is setting up the competition body in Botswana, said guidelines on such deals are still being finalised by the Attorney General to operationalise the authority.
“From the Competition Authority point of view, there is nothing that Botswana can do,” he revealed this week.
Although, the deal will bring positive impact to the region in terms of new capital, South Africa and Namibia raised concerns on the way Wal-Mart conducts business.
The two countries, with almost similar history, are concerned about the buying policy of the giant U.S retailer and have issues in terms of employment and South Africa is worried about importation of cheap goods from abroad.
The worry is that Wal-Mart will create linkages with external business, a concern raised by strong unions from that country although South Africa finally gave the deal the greenlight.
In Namibia, the competition regulator had objected to the acquisition, but the High Court overruled its decision.
As for Botswana, Competition Authority is setting up office and it is only government that intervenes to safeguard local producers under the new policy that protects local producers.
“We have no legal basis to intervene at the matter at hand,” said Kaira, who was previously with Competition and Consumer Protection Commission in Zambia.
“We do not currently have the legal authority.”
That legal authority will only come after the AG has finalised the guidelines that will not necessarily need to be debated at the national assembly, but pass through a committee of parliament.
The guidelines are expected to be ready in 60 days, but by then Wal-Mart would have raided the country. Before the authority can function, it needs regulation.
However, one analyst pointed out that even if the Botswana Competition Authority was operational, it was not going to make any difference because the ‘meat’ of the deal is in South Africa, where Wal-Mart is launching as a springboard to Africa.
In a statement on its website, Massmart said the South Africa Competition Tribunal gave the merger the greenlight to proceed to finality and has accepted the conditions proposed by Wal-Mart and Massmart, which include the set-up of a R100 million (about P96.6 million) supplier development fund.
It was also agreed that there will be not merger-related retrenchments for a period of two years as well as continued recognition of SACCAWU for three years post the merger.
The Competition Tribunal further acknowledged the undertaking made by the merging parties that preference would be given to re-employing the 503 workers that were retrenched in 2010 prior to the proposed merger being announced.
Botswana, which has large presence of large South Africa’s retailers, has not been notified of the transaction because it does not have an operational Competition Authority, as is the case in other areas where Massmart operates.
Game is a major discount retailer of general merchandise and non-perishable groceries for home, leisure and business use.
With Wal-Mart coming to Botswana, price war is in the offing as it credits itself as providing cheap goods, but of a quality and may introduce some of the perishable goods that Game Stores does not sell currently.