Minister of Economic Development and Others v Competition Tribunal and Others, South African Commercial, Catering and Allied Workers Union (SACCAWU) v Wal-Mart Stores Inc (110/CAC/Jun11, 111/CAC/Jul11) [2012] ZACAC 6; [2013] 1 CPLR 37 (CAC) (9 October 2012)

Minister of Economic Development and Others v Competition Tribunal and Others, South African Commercial, Catering and Allied Workers Union (SACCAWU) v Wal-Mart Stores Inc (110/CAC/Jun11, 111/CAC/Jul11) [2012] ZACAC 6; [2013] 1 CPLR 37 (CAC) (9 October 2012)

The Court held that the supplier development fund, as a merger condition under section 12A(3) of the Competition Act, must be targeted at micro, small, and medium-sized South African producers, particularly those owned or controlled by historically disadvantaged persons. The fund's purpose is to minimise risks to these suppliers arising from the merger, incentivise the merged entity to purchase South African products beyond its ordinary procurement, and facilitate integration of local suppliers into the merged entity's global value chain. The Court rejected proposals to extend the fund to large enterprises, finding such an approach beyond the scope of the Act and unjustifiable. The fund...

Citation
[2012] ZACAC 6
Parties
Applicant: Minister of Economic Development; Applicant: Minister of Trade & Industry; Applicant: Minister of Agriculture, Forestry & Fisheries; Respondent: Competition Tribunal; Respondent: Competition Commission; Respondent: Wal-Mart Stores Inc.; Respondent: Massmart Holdings Ltd; Respondent: SACCAWU & Others; Respondent: SACTWU; Respondent: SASMMEF; Applicant: SACCAWU; Respondent: Massmart Holdings Limited
Court
Competition Appeal Court
Jurisdiction
South Africa
Judgment Date
9 October 2012
Case Number
110/CAC/Jun11, 111/CAC/Jul11
Procedural Posture
Review Application / Post Merger Conditions Determination
Outcome
The Court imposed a condition requiring the merged entity to establish and contribute up to R200 million over five years to a supplier development fund targeted at South African SMMEs and historically disadvantaged suppliers, with specified governance and reporting requirements.
Judges
Davis JP, Mailula JA, Zondi JA
Legal Topics
Public Interest Merger Conditions, Small and Medium Enterprise Support, Employment Protection, Supplier Development Fund, Competition Act Section 12a, Global Value Chain Impact
Competition Law Commercial and Corporate Public Interest Merger Conditions Small and Medium Enterprise Support Employment Protection Supplier Development Fund Competition Act Section 12a Global Value Chain Impact

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Parties

Minister of Economic Development

Applicant

Minister of Trade & Industry

Applicant

Minister of Agriculture, Forestry & Fisheries

Applicant

Competition Tribunal

Respondent

Competition Commission

Respondent

Wal-Mart Stores Inc.

Respondent

Massmart Holdings Ltd

Respondent

SACCAWU & Others

Respondent

SACTWU

Respondent

SASMMEF

Respondent

SACCAWU

Applicant

Massmart Holdings Limited

Respondent

Procedural Posture

Review Application / Post Merger Conditions Determination

Legal Issues

  1. 1 What is the appropriate scope and purpose of the supplier development fund to be imposed as a merger condition under section 12A(3) of the Competition Act?
  2. 2 Should the fund target only SMMEs and historically disadvantaged suppliers, or also larger enterprises?
  3. 3 What is the appropriate quantum and duration for the fund to address public interest concerns arising from the merger?

Ratio Decidendi

The Court held that the supplier development fund, as a merger condition under section 12A(3) of the Competition Act, must be targeted at micro, small, and medium-sized South African producers, particularly those owned or controlled by historically disadvantaged persons. The fund's purpose is to minimise risks to these suppliers arising from the merger, incentivise the merged entity to purchase South African products beyond its ordinary procurement, and facilitate integration of local suppliers into the merged entity's global value chain. The Court rejected proposals to extend the fund to large enterprises, finding such an approach beyond the scope of the Act and unjustifiable. The fund...

Court Disposition

The Court imposed a condition requiring the merged entity to establish and contribute up to R200 million over five years to a supplier development fund targeted at South African SMMEs and historically disadvantaged suppliers, with specified governance and reporting requirements.

Orders

  • Massmart must establish a supplier development fund within four months, filing its structure with the Competition Commission and parties.
  • The fund's purpose is to minimise risks to micro, small, and medium-sized South African producers caused by the merger, incentivising purchases beyond ordinary procurement.