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MSM - Massmart Holdings Limited - Update on Process with Competition Authorities

Release Date: 15/03/2012 12:12
Code(s): MSM
Wrap Text

MSM - Massmart Holdings Limited - Update on Process with Competition Authorities Massmart Holdings Limited (Incorporated in the Republic of South Africa) (Registration Number: 1940/014066/06) Share code: MSM ISIN: ZAE0000152617 ("Massmart" or "the Company") Update on Process with Competition Authorities Shareholders are referred to the judgment of the Competition Appeal Court of South Africa ("the CAC") released on 9 March 2012 concerning the merger between Massmart and Wal-Mart Stores Inc. ("Walmart" and, together, "the merging parties"). The judgment is publically available but, for convenience, a copy can be accessed on the Massmart website (www.massmart.co.za). Subsequent press coverage of the judgment has been extensive but the main points to be highlighted include: - The Massmart / Walmart merger has now been approved by all three of the South African Competition Law Regulators (being the Competition Commission, the Competition Tribunal and the CAC); - The review brought against the Competition Tribunal`s decision by the Ministers of Economic Development, Trade & Industry, and Agriculture, Forestry & Fisheries ("the Ministers") was dismissed, with costs awarded against the Ministers; - The CAC confirmed two of the conditions contained in the Competition Tribunal`s decision of 31 May 2011, which had been voluntarily offered by the merging parties during the hearings (including an obligation to ensure that there are no retrenchments resulting from the merger for a period of two years; and an obligation to honour existing labour agreements and not to challenge SACCAWU`s position as representing bargaining units within Massmart for at least three years); - The CAC ordered the reinstatement of the 503 Massdiscounters employees retrenched during 2009 and 2010. While the practical implications of this order are unclear at this stage and are being considered by our legal team, Massmart respectfully disagrees with the CAC`s finding that there appeared to be a relationship between those retrenchments and the merger; and - With regard to the R100 million Supplier Development Fund proposed by the merging parties and accepted by the Competition Tribunal, the CAC ordered the commission of a study by three experts, one to be appointed by each of the merging parties, the Ministers and SACCAWU respectively, to "determine the most appropriate means together with the mechanism by which local South African suppliers may be empowered to respond to the challenges posed by the merger and thus benefit thereby". The experts must be appointed within a month of the judgment date (9 March 2012) and their report circulated within three months of the same date. At that point, the parties involved have another month to make further submissions to the CAC which will then formulate a condition, taking account of the study and submissions, as to the "programme to be established for the development of local South African suppliers". The costs of the study are to be borne by the merging parties. The merging parties look forward to engaging constructively with the CAC, the Ministers and SACCAWU, and are hopeful that the study will support the initiatives already underway through our Supplier Development Fund which has been operational since June 2011. It is difficult to be certain when the above process may reach finality, but will likely only be in the latter half of 2012. Johannesburg 15 March 2012 Sponsor Deutsche Securities SA (Proprietary) Limited Date: 15/03/2012 12:12:01 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.

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