'Wal-Mart a win for SA consumers'

"It's some good news for once, all we've had is the bad news - the toll road fees, electricity and water price increases. I'm glad that the threats didn't win - I'm glad that opportunity won," Schussler told I-Net Bridge/BusinessLIVE.

"In a sense the deal will help the inflation rate - it might not come down but it will make a bit of a difference," he added.

In what was the most eagerly anticipated decision in SA retail history, the Competition Tribunal gave the nod on the 16.5 billion rand mega-deal, adding a few conditions for good measure.

The antitrust authority said the companies must uphold existing labour agreements for three years, ensure that no jobs are cut for two years and added that it accepted the condition proposed by the merging companies to set-up of a 100 million rand supplier development fund.

Notably, the Tribunal shied away from local procurement targets - government and labour unions were concerned that the acquisition would lead to job losses and hurt local procurement.

"It would be very difficult to give one company a quota - I say to Massmart you can only buy 20% of your product from overseas and then you don't do that to Shoprite and Pick n Pay and they have to be merger specific - but once you do that you are no longer in the WTO rules," Schussler said.

Massmart CE Grant Pattison told a teleconference that the signal sent by the Tribunal embraced a "mainstream interpretation" of competition law, and had "to some extent rejected the radical interpretation".

Retail giant Wal-Mart in November made a 16.5 billion rand cash offer to acquire 51% of Massmart at 148 rand per Massmart share - a smaller stake than the initial 100% offer in September, but one that would see Massmart retain its listing on the JSE.

News of the approval strengthened the rand by 12c against the dollar and the group's share price increased 1.7% to 142.56 rand.

According to Absa Investment analyst Chris Gilmour, South Africa can hold its head up high in the investment world and will be seen as a good investment destination.

"I'm convinced that other multinationals will follow. Africa is becoming flavour of the year in terms of emerging markets," he told I-Net Bridge/BusinessLIVE.

Following some procedural issues with the JSE, the deal is expected to be concluded within weeks. Massmart will not be rebranded as Wal-Mart.

"We will now move to close the transaction as soon as possible... we do look forward to closing... in a matter of a few weeks," CE of Wal-Mart International, Doug McMillon, said during the teleconference.

Pattison added that all deal flows had been arranged in consultation with the Department of Treasury and the Reserve Bank.

According to Schussler, South Africa has in excess of 32 million primary consumers who would save money by the entry of the world's biggest discounter.

"For every consumer out there, Wal-Mart entering and lowering prices will be a boost," he commented.

Wal-Mart said it had committed to sourcing the vast majority of fresh food products from South Africa, and was planning a "substantial" programme to train and develop thousands of local farmers, with a specific focus on black economic empowerment.

Gilmour added that in the longer term consumers would reap the benefits.

"They will be profound [benefits] of significantly lower prices and a much greater choice of products on the shelves," he said.

Pattison said consumers would start seeing benefits as early as July.

The Massmart group includes Game, Dion Wired, Makro, Builders Warehouse and Masscash.