Competition Tribunal
of South Africa
Hearing in the matter between
WAL-MART STORES INC
and
MASSMART HOLDINGS LTD
Case No. 73/LM/Nov10
held at
DTI Building
Sunnyside
on
25 March 2011
Panel:
N Manoim
Y Carrim
A Wessels
Case Manager:
R Badenhorst
\
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CHAIRPERSON: Morning everybody. We’re here for the discovery
application brought by the three government departments. I assume
that the appearances are as before, so we don’t need to repeat them.
We’ve received the request from the government departments and we
received the merging parties’ response yesterday afternoon to that.
So, let’s start then with you, Mr Bhana.
ADV BHANA: Thank you Chair. Chair, before I deal with the actual
portions of the requests that we persist with, I just want to indicate
firstly that the list that we got is extremely meagre. It’s superficial
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and, in fact, it doesn’t accord with your indication as to what you
expected in the response and indeed not what we required when we
sent a covering e-mail.
Firstly, to take you to the proceedings on Tuesday, at page 33
of the transcript, arising out of the list that we were to provide, we
raised the issue about dispensing with written applications and against
that background you stated “we are happy with that. I think a lot of
what goes into a discovery application is just...” I think there is a
typographical error “verbiage anyway”. So, it think just pin it down
to what is being sought and what the reasons for resisting are”.
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We, when we sent the list on behalf of the government
departments under a covering e-mail, on the 23rd of March wrote to
the merging parties’ representatives and we stated the following:
“Kindly let us have your response by 10h00 tomorrow and insofar as
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your clients decline to furnish the documentation, please explain the
reasons therefore”. That was consistent with your direction and also
that we could adequately prepare as to the basis for refusal of the
documentation.
When you have regard to the list that was ultimately submitted,
nothing at all was said in relation to the portions of our request, which
were ignored. A tender was made of a few items and having regard to
the list, it is absolutely impossible to establish the attitude as to the
provision of the remainder of the items. We submit that the
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representatives for the merging parties, as we will attempt to show,
are really being obstructive in relation to the request for
documentation and information.
What the request did have as a preamble was the following.
“Subject to the reservation of their rights to dispute the participation
of the applicants in these proceedings and the entitlement of the
applicants to seek any discovery from the merging parties, the
merging parties tender the following documents, which are relevant
to the expert evidence contained in the RBB report”. So, the attitude
that Massmart and Wal-Mart take is that we are only going to give
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you what we think is necessary for you to deal with in the RBB
report, completely highhanded, completely arrogant and obstructive
of our attempt to get proper information from them.
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Just to get out of the way this aspect of the right to participate,
because somehow Massmart and Wal-Mart think that they can
prevent this Tribunal coming to a proper decision by limiting full
participation by my clients, government. In this regard we submit that
it is clear. You have already recognised my client’s right to
participate in these proceedings, indeed, even as indicated as late as
Monday and recorded at page 34 of the transcript ... I beg your
pardon, it’s page 1, I think, of the transcript. The exchange started at
page 1 and on page 2 in relation to the manner of participation by
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government, this is what you said. “We will allow the department to
cross-examine this week on the issues raised, as it were, on the public
interest issues, other than the labour issues, because I understand
that that is the burden of where they want to go”.
Leave aside for the moment whether we can and should be
limited to the procurement issues, the point is that you recognised
government’s right to participate by cross-examining and insofar as
there is that recognition, the documentation that is required, when you
take it through it, is going to be essential to a proper and meaningful
cross-examination of the merging parties’ witnesses and the testing of
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the sweeping assertions made in their witness statements.
Indeed, the timetable that we agreed to in relation to the filing
of the expert report on behalf of government was on the basis that we
would have discovery or substantial discovery so that our expert was
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in a position to prepare his report properly and we submit that a right
to participation must be a right to effective participation. It is no right
of participation in any meaningful way if we are simply limited to
making broad submissions in argument and dealing with broad issues,
responding to the RBB report without being able to test the factual
underlay of that report.
So, we say that the participation must be effective participation
and it cannot be limited by the restricted access, which the merging
parties seek to place on us. One can understand why they’ve taken
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this position. The Commission, for reasons which we all appreciate,
didn’t request documentation and information, which they ordinarily
would have. The merging parties now think they can snatch at the
bargain, so to speak, and simply bulldoze the merger through on the
basis that there is very little factual information that has been sought
or put up, sought from their clients or indeed put up by their clients.
We submit that that is not an attitude that you will allow to
prevail, particularly if we can remind you as to what you said on
Monday, with which we fully agree. It’s recorded at page 29 of the
transcript and that was to the effect that at the end of the day you as a
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Tribunal have got to come to the best possible decision, based on the
facts and the information that we have requested is to enable you to
be in that position to come to the best possible decision and for us to
participate meaningfully.
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In relation further to the right to participate, Section 18(1),
certainly in relation to one of my clients, clearly recognises that the
Minister has a right to participate fully and to remind you, 18(1) says
“in order to make representations on any public interest ground
referred to in 12(a)(3), the Minister may participate as a party in any
intermediate or large merger proceedings”. Now, those words are
important. If we are to participate as a party and if the right to
participate as a party and if the right to participate is to be recognised,
it cannot be limited to saying you will come and make submissions. A
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party has a right to cross-examine. A party has a right to seek proper
and full information.
If that were not enough, you can make any order that is
necessary in the discharge of your duties, as is envisaged in Section
27(1)(d) of the Act and furthermore, insofar we sense an attitude on
behalf of the merging parties that, well, hard luck, tough for you, the
Commission has completed its investigation, you can’t come with
requests for information at this stage, we will remind you simply that
in terms of Section 16 you come to an independent valuation. It’s not
a rubberstamping of the Commission’s investigation. As part of the
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investigation and decision you make, you are entitled to have all the
information before you, whether the Commission calls for that
information or not. So, it’s no answer to say, well, the record is
complete and that’s the end of the story.
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In addition, we submit that even if we hadn’t requested this
information, there was a duty on the merging parties to put this up,
having regard to what is contained in their witness statements. The
onus is not on government to show or the Minister to show that the
merger cannot be justified on public interest grounds. As Section
12(a) provides when determining the merger ... 12(a)(iii) “when
determining whether a merger can or cannot be justified on public
interest grounds, the Commission or the Tribunal must consider the
effect that the merger will have” and it sets out the four categories
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that you are familiar with.
But the point I’m making is that there is much of a duty on the
merging parties to have put up this information, whether or not my
clients requested it, to persuade you that the merger can be justified
on public interest grounds. It’s not a negative that government has to
show or indeed the trade unions have to show. So, we say even
without our request, there was this obligation on them.
If we can then turn to the list of documents that we sought and
what was provided, at a rough count we requested at least 29 main
categories of documents. Within some of those categories there were
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subcategories of documents. What we got was a response in relation
to eight of the items and really even in relation to those eight, there
are only three where there is a complete response, because the
response in relation to the balance of the items, even those that are
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tendered, is not a complete response and we’ll take you through that
to show you why.
What emanates from the response is that we now sit in this
position. There are two categories of documents that we seek, two
main categories in relation to our list. The first is in relation to those
items where the request for discovery and information was simply
ignored as if it wasn’t made. It wasn’t dealt with in our learned
friends’ response at all, and the second is insofar as they did tender
certain information, that tender is incomplete, as we will show you in
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a minute.
Important to appreciate, before we get into the detail of the
documentation, is that a number of these documents and the
information sought really arises from the witness statements that were
filed. So, even if it were an answer to say the Commission didn’t
request this information at the time it was preparing its
recommendation or prior thereto, once one appreciates that those
witness statements were filed after the Commission had filed its
report, there clearly is or should be an appreciation that having been
faced with the statements we now have in the witness statements of
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Mr Bond, Mr Patterson and indeed RBB that there is nothing
untoward or improper to now request that information and to say if
you make these statements, we want to test the basis on which you
make the statement. And it might turn out, Chair, that we find support
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for the statements in those documents. What we find difficult to
understand though is why this obstructive attitude has been taken up,
if indeed there is nothing to be nervous about in terms of what the
documentation reveals.
So, if I can then take you to those portions of the request that
was simply ignored and I’ve made a list, which may assist you, I will
give you the list firstly. It’s with regard to the numbering on the
document, which we sent through on Wednesday morning. It’s items
2.1, 2.2, 2.3, 2.5, 2.7, 2.8, 2.13, 2.14, 3.1, 3.2, 3.3, 3.4, 3.5, 3.6, 4.2,
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4.3, 4.4, 4.5, 4.8 and 5.1. In relation to the second category, which I
referred to as that in respect of which there was a tender but not a
complete tender, the portions of our request, which we will have to
address, are 2.4, 2.6, 2.12 and 4.1.
Now, in the absence of having been given the reasons by the
merging parties as to why they were not providing information, it’s
very difficult for us to address you as to what their objection is in
relation to providing the documentation, other than what we can guess
to be their attitude by the preamble to their response. The
documentation in each of those categories is highly relevant to the
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issues, which are going to arise during the evidence and indeed during
argument and we submit that the relevance of the documentation and
information requested is really beyond question. We are not sure if
there are any specific items that you want us to take you through,
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because unless there is a specific objection to one or other request, we
cannot really establish whether our learned friends have any difficulty
with the relevance of the documentation, and perhaps that’s
something I should then return to in reply, unless you have specific
questions in relation to that list, before I deal with the tender that has
been made.
CHAIRPERSON: Well, I think if we can look at themes, there are a
number of documents here that deal with labour issues that I thought
were not going to be part of the ED’s case. It’s in fact part of the
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union’s case. Then there are a number of documents that appear to be
in the public domain in any event. So, it’s that second category that I
would like you to talk to.
Then there was information, for instance, relating to
distribution centres of Massmart. That’s 4.4, and I think there is a
similar one about the distribution, a similar one in relation to, I think
it was 2.8, of Wal-Mart. I think perhaps just speak generally to those
three themes.
ADV BHANA: In relation to the one category that’s easy to get out of
the way, that’s the documents that they say are in the public domain.
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It’s not one of the categories that we are persisting with compelling.
As far as I remember, that applied only to the UK grocery report. I
think that’s the document sought in paragraph 2.9 of our request.
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CHAIRPERSON: I thought it may also encapsulate 2.1 in the sense
that if you were interested in finding these things, you could go to a
website of particular competition agencies in the countries where they
operate.
ADV BHANA: Yes.
CHAIRPERSON: Most of them, to my knowledge, do have websites.
ADV BHANA: In relation to 2.9, the UK grocery report, they told us
where we can get that and it’s one of those that we persist in. So, that
you will see is not on the list that I’ve given you. In relation to 2.1
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and 2.2, certainly there may be judgements that are published. We are
not sure and we cannot be sure that all judgements are indeed
published or publicly available, but also there may be, take for
example 2.1, a complaint which didn’t ultimately result in a
judgement because if was settled. That’s the kind of thing we would
never be able to find on a website, which publishes judgements.
So, it’s not a sufficient answer to say that those documents are
publicly available and I don’t think that is ... they have certainly not,
in relation to 2.1 and 2.2., raised that as a basis for the objection, but
insofar as they may do so now, those are our submissions as to why
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you should order that. They clearly have easy access to that. We are
all pressed for time in trying to keep to a tight timetable and we
request that they simply give us the assistance and the Tribunal the
assistance, even insofar as some of the documents in 2.1 and 2.2 may
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be publicly available. It certainly appears that not all of that would be,
as for example in relation to complaints that might have simply been
settled.
Then in relation to the issues pertaining to labour, it is so that
the thrust of our participation, and that was in order not to take up too
much time before this Tribunal, my clients, in the thrust of our
participation, it’s in relation to procurement, but the concerns that
were raised and particularly in the statement by Prof Levine filed on
the 28th of February, are not limited to procurement issues. They
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indeed cover the labour issues and we submit that those are all part
and parcel of the public interest issues.
You will also recall that Mr Kennedy, on behalf of the unions,
on Tuesday indicated that it’s not that simple to simply separate
labour and procurement issues, but perhaps the most important point
to be made in this regard is that whilst the request emanates from us
here, this information and this documentation is documentation which
you would require independently of our participation. So, even if we
were only to be limited to participating on the procurement issues, we
submit that that’s not a basis to restrict the request for information.
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Then in relation to the distribution centre documents, I think it
is 2.8 and 4.4, if I can just get that, of our request. In relation to that,
firstly in relation to paragraph 2.8, the request there emanates from
testing what is set out by both Mr Bond and Mr Patterson in each of
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their respective witness statements. They, as we’ve indicated in our
request, refer to the global procurement network and capabilities of
Wal-Mart and we want to establish exactly how extensive that
network is, particularly as clearly one of the themes here is that the
merger and the benefit, which Massmart seeks to obtain from the
transaction, is to benefit from Wal-Mart’s procurement network.
We submit that that is information, which is highly critical and
relevant to establishing the extent of that network and the extent to
which Massmart will seek to benefit from that post merger and, as a
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result thereof, that that could result in a reduction of local supply.
Then the documentation in relation to Massmart in 4.1 is
clearly to contrast the current position or the position pre-merger with
what can be expected post-merger. Again, in 4.1, as we indicate, the
document arises in relation to the need to test what is set out in
paragraph 6 of the witness statement of Mr Patterson.
So, in summary then in relation to the 2.8 and 4.1 documents
we say that we need to better understand the source of the
efficiencies, efficiencies emanating from the global procurement
network and to understand how that is going to impact on the lower
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prices, which the entity post-merger indicates it will be able to
achieve. We submit that those efficiencies will presumably come
from the more efficient supply, management of supply and indeed in
relation to a greater percentage of imports than is currently provided.
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I’m reminded that it’s 4.4. I’ve referred to it as 4.1. Let me just check
on my list. Yes, it’s 4.4.
In relation to testing the Massmart position, our view is that
clearly one needs considerable infrastructure to facilitate the
importation of goods and to the extent that Massmart suggests that
even without the merger it is in a position to import to the same extent
as it would have post-merger, that is something that needs to be tested
by us.
Dealing then with the tender that has been made and the
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deficiency in the tender, if we can take you to the tender in paragraph
1 of the Massmart/Wal-Mart response, this pertains to the request we
made in paragraph 2.4 and just to remind you, broadly speaking that
was in relation to the data and underlying methodology in respect of
the proportion of purchases by DNS in Chile that were locally
produced in terms of the definition we have set out, as opposed to the
locally procured definition used by RBB. Incidentally, this is another
good example of an issue that only arose from the witness statements.
Chile was, as far as I can recall, not something that we put up in the
investigation by the Commission. Massmart and Wal-Mart didn’t put
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that up and the example as to what happened in Chile, to the best of
my recollection, emanating, if not for the first time, certainly in that
detail in the witness statements.
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So, that was the request in 2.4 and the response that came back
was the documents sought in 2.4, insofar as such documents exist in
the form requested and are in the possession of Wal-Mart. Now Chair,
although this has been termed discovery, it’s as much a request for
information as discovery in the ordinary sense of saying you have a
document, please produce it. We submit that this should not be
allowed to stand in the way of getting the information. Insofar as it
may not be in the form of a document, which exists, we believe the
information is easily obtainable by the merging parties from their
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systems and they should do so. They must provide the information,
even if there isn’t one single document in which this is to be found.
So, we say if there isn’t a document, then we want the underlying data
that is relevant to the request in 2.4.
Then in relation to 2.6 we requested again in respect of DNS in
Chile the underlying data and measurement methodology in respect of
the claims made by RBB and later concerning the GBB program and
the response that came in paragraph 2 of the responding document
was this. “In response to paragraph 2.6, documents supporting
figures 4 and 5 of the RBB report, insofar as they have not already
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been provided to the applicants”.
Now Chair, that is a tender, which we submit is one that is
somewhat ambiguous. We are not interested only in what supports the
RBB report. Indeed, we want to have all of the information and we
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are just as much interested in information which may not support the
RBB report. So, to limit the tender in this regard, we submit is
improper and that shouldn’t be accepted by the Tribunal. We would
like all of the information.
The point is made that we don’t just want the document. We
want the underlying data to be able to analyse that data. Our expert
must be in a position to analyse that data to see that the statements
that they make are indeed supported by the underlying data.
CHAIRPERSON: In relation to these documents that have been
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tendered, it’s a little abstract for us, because we don’t know what has
been tendered and what the deficiency is. Have you seen the
documents that have been tendered yet?
ADV BHANA: Some of it was given to us insofar as it was referred
to in the RBB report and Mr Hodge has seen some of it. What has
been sent to us is what has been utilised in the RBB report, but the
point is that there may be information, which RBB has not utilised in
their report, which is relevant to test on that. You are correct to an
extent this is in the abstract and that is why we submit that the tender,
as made, should not dispose of those categories that we’ve referred to,
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but rather an order should be made in the broader terms that we’ve
requested.
I’m also told by Mr Hodge that in many instances RBB simply
rely on the Wal-Mart presentation that was made and RBB itself
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doesn’t have the underlying data or it doesn’t refer to the underlying
data. In relation to the tender in paragraphs 3 and 4 of the Massmart
response we are satisfied with the tender in those paragraphs, as
corresponds with paragraphs 2.9, 2.10 and 2.11 of our request.
Paragraph 5 of the response deals with paragraph 2.12 of our
request. In 2.12 we requested copies of the address and A C Nielson
reports, which support the claim made in footnotes. We refer to the
two footnote numbers there. We’ve been corrected as to the number,
but the tender that is made is that they are prepared to do so, but
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simply require an order from you. So, there is no difficulty with that. I
think obviously for obvious reasons it might be that they are not in a
position to make that available. So, that is simply something which
you will make an order to enable them to give effect to the tender.
Getting to paragraph 6 of the response, which responded to
paragraph 4.1 of our request, in 4.1 we ask for any documents
evidencing and/or in support of Massmart’s approach to procurement
and procurement philosophy, as detailed in paragraph 6 of the witness
statement by Patterson and we said without limiting the generality of
any documents evidencing and/or support of the variety of sources
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that Massmart envisages to procure supplies from any and all market
search documents in support of that. The response that came was the
documents that were tendered were those in support of the figures in
tables 7 and 8 of the RBB report and we submit that it’s no answer to
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say we’re simply giving you the data that supports what our experts
says. Let us decide what is supportive and what is not. Give us all of
the data.
But more particularly in think in this regard a point needs to be
made in relation to tables 7 and 8 of the RBB report. We say that
paragraphs 7 and 8 of the RBB report are misleading, as they only
report on direct imports and not those imports that have been sourced
through local agents and we say this needs to be rectified.
Furthermore, this touches also on what we asked for in 4.6. The
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requests tie in that we require the breakdown within subcategories in
order to assess the import exposure of the different product line at a
more detailed level. Indeed, this is one of the requests by the Minister
that have not yet been fulfilled.
Indeed, as I’m reminded, we requested ... this arose out of Mr
Patterson’s evidence in his witness statement as to Massmart’s
philosophy on imports. So, we request documentation in relation to
that and we then deflect it with a reference to a table in the RBB
report, which deals with actual imports. Well, it’s not just the actual
imports we are interested in. We are also interested in the philosophy
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and the strategy that Massmart has. So, we submit that the tender that
is made is completely inadequate in relation to the documents
requested in 4.1.
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Then the response in the responding document, paragraph 7,
which deals with 4.6 of our request, in 4.6 we requested ... it is so that
we requested a document providing the breakdown of sales, direct
imports and local content by major subcategories of the product
categories listed in table 7 and 8 of the RBB report and we said, for
example, provide details for the major subcategories of non-edible
groceries. The response that came back is that they are not in
possession of the document. In the light of that response they must
then clearly give us the underlying data. Again this is an example of
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information, which may not exist in the form of a document, but it’s
information that we submit would be easy enough to obtain from their
records and give us the underlying data if you don’t have a document
that pertains to what has been requested. So, there we will, in the light
of the response, ask for all of the underlying data that is relevant to
that request.
Finally, in the responding document, paragraph 8, dealing with
our request in paragraph 4.7 where we asked for the ... I beg your
pardon, that is a tender that we are satisfied with. They’ve indicated
where the document is to be found. So, that falls away. Chair, in those
20
circumstances we will then ask for you to compel insofar as the first
category of documents goes, all of those requests that were simply
ignored, which I gave you the list of earlier, and insofar as the tender
is deficient in relation to paragraphs 2.4, 2.6, 2.12 and 4.1, we ask for
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an order to give effect to what I have submitted to you that we find
deficient with the tender. Thank you, Chair.
CHAIRPERSON: Thanks Mr Bhana. Mr Unterhalter?
ADV UNTERHALTER: Thank you Chair. Our submissions, Chair,
will be approached in three parts. The first will consider the orders
that have been made by the Tribunal concerning the basis upon which
the Ministers have been permitted to participate in these proceedings.
The second will be some general questions around the scope of the
discovery that is now sought and the consequential harms that it will
10
bring to these proceedings, and then thirdly we will engage some of
the detail of what is sought in this request.
Let me begin firstly with the question of participation. Our
learned friend made a number of, with respect, bold submissions
concerning his clients who, as we will all recall, had steadfastly not
engaged either with the Commission process, though the Commission
sought their participation, nor did they engage with your process.
Until very belatedly they made contact with you, Chair, and they were
allowed to then come in as parties in the process, but had studiously
failed to do the thing that every other party has done in this process,
20
which is to put up their case.
So, it seems to us, and I will take you to the orders that you’ve
made, but it seems to us that the Ministers believe that they cannot
only engage your process as they like. They can do it in whatever
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manner they like and they can then seek rights for themselves that
nobody else has sought. We maintain the modest belief that parties
cannot conduct themselves in that way. It may be that for the
purposes of Ministerial engagement Ministers in their own sovereign
realm can demand things and be given it, if they act within their own
powers, but when they come before your process, you are an
independent institution and they come as a litigant like any other.
They do not enjoy any special preferment and they must engage you
and they must deal with the other parties in your process on a basis
10
that is not special, not preferred, but is fair and equal as everyone who
operates under the rule of law.
But it appears that the Ministers do not take that stance and
indeed, and I say this with reluctance, with some arrogance accuse the
merging parties of being obstructive and highhanded and the like.
This, in respect of parties who had to come to you on Tuesday and as
a matter of your indulgence come and participate in the process and
now, having been allowed in on a particular basis, which I shall come
to, now accuse the merging parties of somehow obstructing them in
their participation and somehow being retentive in respect of matters
20
that the Tribunal has a duty to investigate.
Well, one of the dangers of coming late and by way of
indulgence is, of course, that you do not know how the matter
apparently has developed and the basis upon which the parties have
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engaged under your regulation and by your determination. We will
demonstrate to you that what is now sought to be done is to revisit the
very premises upon which this merger has been regulated by the
Tribunal.
Well, if that happens, then a whole variety of consequences are
going to occur, which will make your process entirely ungovernable
and we will suggest to you that that invitation should be firmly
rejected on grounds of both utility and fairness.
Let me come to the first question, which is what is the basis
10
upon which the Ministers participate? Recall, if you will, Chair and
members of the Tribunal, that the Ministers had not put up anything
and they came to you with an application saying we had in February
and in the February affidavits signalled certain concerns that we had
about the merger; that they said at that stage they were in no position
to put up a factual or expert witness statement. They were running
their own process of engagement with the parties, which they hoped
would realise results that were favourable to their conception of the
matter and they claimed that they had hoped that that would not
require them to engage.
20
We, in our answer, made it absolutely clear that whilst we had
fully engaged with the Ministers in their process, we had made it
perfectly clear at every stage of that process that we were not willing
to give them certain of the undertakings that they sought in respect of
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procurement obligations that were going to be uniquely borne by the
merging parties and no one else in the retail sector. We had given
extensive information in that process. There was no apprehension on
their part as to where that process might go as far as the position that
my clients have taken, and consequently they were entirely at large to
enjoy their own process, investigate within the scheme of that.
Substantial information was given through that process to the
Ministers, but they had chosen, and it’s an election that the Ministers
can make, they had chosen not to engage the Commission in its
10
investigations and we have seen on the record the number of
occasions where the Commission said we want Ministerial
submissions and they were told they were going to get them and the
Ministers decided, no, they were not going to participate in the
Commission’s process.
Well, the Commission process went on. It was a rigorous
process. There is a substantial record, which is now before you, which
is the fruit of that investigation and the Commission came to an
answer. That was not the last opportunity for the Ministers, because
they were notified of the Commission’s decision. They were notified
20
of the process that occurred before you at the prehearing conference
and they chose again not to engage, again perfectly within their right
to do so, but if you are not going to engage in a process, then you
cannot come later and seek to reconfigure the rules of the game. You
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have determined those rules and those are the rules that bind the
Minister.
The Minister was invited to come to the prehearing conference
that we all attended before you and I’m going to take you to that
prehearing, because certain agreements were reached there, which
clearly they decided to not subject themselves to, because they didn’t
want to be part of the process. Very good, but don’t come later and
seek to reconfigure and restyle those rules.
So, if I can then go to where we are, which is what are the
10
orders that you have made on this subject of the Ministers’
involvement in these proceedings and the scope of their participation?
You will recall that the postponement application was to be argued
before you and you indicated at the outset of the proceedings that you
had read the applications and that you had a position to put to the
parties. That position is set out in the transcript. In fact, we refer you
to the transcript at page 1 where you set out the fact that there would
be a second hearing in May and that that would be utilised for the
purposes of the expert determination.
Then you indicated at around line 17 “we will then set dates for
20
filing of the statements and that will entail getting the discovery
issues resolved” and I will say something about that a little bit later,
but you indicated that in effect what would happen is that the
Ministers would be entitled to cross-examine in the factual portion
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that was going to take place this week, prior to the unions’ efforts,
successful regrettably, to derail this week’s proceedings and then
there was going to be a May session, which was going to involve an
engagement of experts and that engagement was going to be between
Mr Baker for the merging parties and an economist that would be
appointed by the Ministers, and that was going to be an expert
engagement in the May session.
So, I asked you at page 2 of the transcript as to what the scope
of cross-examination is and you said you would allow the department
10
to cross-examine, or we would observe, in circumstances where to
date the Ministers have not put up a case ... everybody else has put up
a case. Everyone else has said what their witness will say, but the
only parties who have not put up a case are the Ministers. Well, they
were then given, through your ruling, the ability to put up a witness
and economic expert to engage with Mr Baker. That’s what they were
entitled to do and they could cross-examine. That is the full limit, and
obviously make submissions at the end of the hearing. That is the full
limit of what you permitted them in the suggestion that you made at
the outset of the hearing on Tuesday.
20
Well, we all went away and we all thought about the matter
and, in fact, it was bitterly opposed by the Ministers, your proposal,
and it was opposed by the unions and the only party that supported
this, because we thought it was a pragmatic way of moving the matter
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forward, not because we thought the Minister was entitled at all at
that late stage to be accorded special rights of being able to lead
evidence, but purely for the purposes of moving this matter on, we
supported the proposal.
What happened is that then that doesn’t suit the unions, so we
know. They bring a completely misconceived application for a stay
and effectively with a gun to the Tribunal’s head the Tribunal says,
well, we have to grant this stay, because we need to have the unions
here to make the running by way of opposing the merging parties for
10
the benefit of the outcome that you need to determine.
Now, nothing about the reluctant stay that you granted altered
one iota the basis upon which the Minister could participate. Nothing
changed that. All that the Tribunal said was you are putting us against
the wall here. With respect, we don’t understand why you were being
put against the wall, because the union could have elected to stay and
participate or not. That’s a choice that litigants have everywhere, but
we are not revisiting that. That was the decision that you made and so
be it. But the fact is that nothing about the reluctant accession to a
misconceived requirement for a stay that had no foundation, as you
20
indicated, because there was no basis then that you could see as to
why any unfairness was being done. Well, how did that ever change
the Ministers’ position? We say it didn’t.
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So, if I could take you to the record, after the adjournment and
after having heard the parties through the representations made to you
in your chambers, we then see at page 3 and 4 what was determined.
You say “thank you. Just for the benefit of members of the public who
have been sitting and waiting patiently, we just met with the parties.
They’ve responded to our proposal” and then you say “but we have,
having heard them, decided that the manner in which we will proceed
is that we will hear the factual evidence of the union witnesses and
the merging parties, other than the evidence of Mr Baker from RBB”.
10
So, from your perspective the factual engagement in this matter
is captured by the factual witness statements that have been filed.
That’s what is going to happen and nothing has changed about that.
The witness of Mr Baker for RBB who is the economist during the
remaining dates – that’s up until Friday – we will then resume on the
9th of May and we will reserve the 9th and the 10th and we will ask the
parties just to hold open the 11th. On the 9th and the 10th we will hear
the economic evidence of Mr Baker and an economic expert to be
called by the merging parties. Sorry, you correct yourself, the three
government departments. So, it will be Mr Baker for the merging
20
parties and a witness or an economic expert for the three government
departments.
There was a debate as to whether we will allow further factual
witnesses and then you allow to be persuaded in respect of recalling
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any witness and you indicate the the hurdle will be very high. You
then say “any party who wants a factual witness recalled will have to
do so by the 14th of April and motivate why there is a material
discrepancy that has emerged in that evidence and why that witness
should be confronted about that”. So, you were contemplating that
there would be an engagement between experts, which would be for
the later sitting and only if there were some conflict between what
emerged from the expert engagement, which was by way of the
witness statement to be filed by the Ministers and the factual evidence
10
that emerged in week one, which was meant to be this week, would
there be any basis for recall and then the hurdle would be that high.
So, to confirm, as you say on page 5, the dates then for filing,
we are going, as we’ve indicated, on the remaining discovery issue,
we will hear from the government departments today so as to once
they’ve examined what is already in their record, what discovery they
wish to still persist with and we will deal with that later today. So, we
won’t set any dates. Then you make it plain that the later sitting is for,
and I refer you to line 11, will be for economic evidence. That’s what
the Minister is being allowed to engage, economic evidence. And will
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only be used if there is some basis to recall a factual witness, in which
case that witness will come first prior to the economic expert.
Otherwise, if there is no such recall, we will deal with economic
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evidence on the 9th and 10th and we will hear final submissions from
everybody on the 13th.
So, the determination that you’ve made, and we say that
remains the binding determination, binding on everyone, including
the Minister, is that the factual terrain has been determined. It is an
engagement in respect of the factual witnesses that have been filed.
There is no discovery that anybody has sought or has been allowed by
you in respect of those matters and all that you permitted and the only
thing that you permitted was that the Minister could have an
10
additional witness and that that would be an engagement with the
RBB economist. That’s what you allowed and said that there will be
the economic evidence, as reflected on page 5. That’s what will
happen in the second sitting.
Well, we are now not going to have two sittings. We are going
to have one sitting, but effectively there will be the factual
engagement and then the engagement on expert evidence. Now Chair,
again it was clear from the submissions that were made to you
informally in your chambers that what you had in mind for the
purposes of the expert engagement was the usual thing that happens
20
as between experts, which is that each expert relies on certain data
that they have assembled and that data is naturally exchanged with the
other expert. That is traditionally what happens. No expert can rely on
data without showing it to his opposite number and there would be a
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data exchange. That was the basis upon which all of this was going to
happen, not as the Ministers now seek to contend; that there is an
entirely different regime which is now going to apply where there are
going to be somehow an extensive discovery, and I will come to just
how extraordinary and extensive it is. That will then allow the
Minister
presumably
time
to
engage
in
whatever
further
investigations these Ministers wish to engage in and then they will
produce their expert statement.
We point out that no provision was made and this was the
10
thrust what of the order that you made clearly entailed. There were
going to be no additional factual witness statements, unless there was
some contradiction that needed to be teased out between the expert
economists and anything that they threw up through their engagement
and the course of factual evidence and cross-examination that
transpired in week one. Those were the rules that you set in the
exercise of your discretion as a Tribunal for the way in which this
merger was going to take place.
Now Chair, if I might take you back one step, which is when
we came to the prehearing by which the first rules were set up in
20
respect of this merger, we have ... it wasn’t tape recorded, but we
have notes of that conference and effectively what happened was that
the question arose as to how the matter would be engaged and the
Competition Commission and Mr Van Hoven in that regard said that
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they wouldn’t lead any evidence, but would simply make submissions
on the report. We, for the emerging parties, said we would be happy
to rest on the record, as it stood, but of course, if the unions were
going to put up additional matter, then we would need to respond to
that. For the unions their counsel said, well, what they wanted to do is
that, and I’m just reading the notes here, one week before the hearing
was their proposal, there would be an exchange of witness statements
and affidavits of witnesses. SACCAWU and SACTWU will put up
two factual witness statements. Other witnesses will be experts from
10
various countries. The witnesses will not be led. There will only be
cross-examination and re-examination, if it is necessary to place to
additional facts before the Tribunal, then that can be done.
Then there was a question as to what our proposal was and we
made a number of proposals to you concerning how the process
should be engaged, but effectively we said that you had to take
account that in this kind of a case we were dealing fundamentally
with public interest issues, that this wasn’t the kind of minute forensic
engagement, which had happened in other mergers or that happens in
restrictive practices in trials before you. That what we needed to get
20
was the essential positions of the parties clear through witness
statements and then a timetable was set out and it was said expressly
that we will ensue a traditional adversarial approach.
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Now, and a timetable was then proposed. In response to that
the Tribunal said, well it didn’t think, in your judgement, that it was
sensible to deal with Wal-Mart issues in other countries and have this
sort of trawl through what Wal-Mart does in 15 countries around the
world. That what would be sensible would be to engage on the issues
around procurement and labour and then any witness who was going
to put up a statement must be capable of being called, and then we set
out the process which was to be followed, which was putting up
witness statements, the summary of the issues in the case, the
10
suggestion as to which witnesses should be called and then the
Tribunal determining which witnesses to hear from and the timetable
for cross-examination and how the limited time available for the
merger was going to be allocated and those were the rules.
Now nobody, given the nature of this merger, took the view
because all of them were steeped in the understanding that this was a
special merger, which dealt with public interest issues, where there
had been a full investigation by the Commission, where the union had
particular issues they wanted to raise, they could raise, they did raise
and they put up their witness statement in some detail and in some
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number, and we were then going to sift through the witness
statements to get to the issues that would be worth hearing about from
oral testimony with limited cross-examination and then hopefully a
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worthwhile engagement on the conceptual and other issues that arose.
Those were the rules.
Now nobody asked for discovery, not the unions, not the
Commission, not Wal-Mart, because we all knew that we couldn’t
possibly make this kind of an engagement on issues of public interest
through the process that the Ministers, who hadn’t bothered to
participate with the Commission, participate in your process, because
they hadn’t bothered to find out what the rules were, they now say no,
no, no, no all of that is off the table. Well Chair, we say you’ve made
10
your determinations on this score and there is no basis for now
resetting those rules, because Chair, just see for one moment where
the Ministers’ notion of this goes.
We’ve heard from my learned friend, he’s not even restricting
himself to discovery in the traditional sense of the word. Traditionally
discovery, I mean in fact the only meaning of discovery is that in
respect of contested issues that are in dispute, that you then determine
relevance. It was most interesting in our learned friend’s address to
you he began by complaining that all of these documents that he’s
seeking and in respect of which we haven’t made, he says, a
20
meaningful response, are all relevant, he says. How does he know
they’re relevant? He hasn’t, for his clients, or his clients rather have
not put up the issues in any witness statement, factual or expert, that
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we can yet determine what they are going to contest and what they are
not.
All that they have said so far is in a February affidavit they
have listed things that they say are of concern. Well they may be of
concern. They may be of concern to the Minsters. They may be of
concern to a member of the lay public. Anybody can have concerns.
Anybody can look at a merger and say that seems to be an issue that
might be of concern, of interest, worthy of investigation. What is the
point of having the Commission as the principal investigative body
10
spending months engaged in an extensive investigation and yielding a
huge record for consideration by you, if Ministers can come in as and
when they wish and say, actually we’d like an enormous amount of
information, because it would be interesting to investigate these
matters and once we’ve investigated them, we might then put up a
witness statement? That is simply not permissible.
So we make the submission that to determine relevance in a
process of this kind where we’ve already got an enormous amount of
information, both from the record from the Commission’s
investigation and not, as the Ministers keep frankly, with a degree of
20
lack of respect for the Commission frankly, just keep saying the
Commission has had the wool pulled over its eyes and they haven’t
done a respectable job. They have done exactly the job required of
them by statute. So they’ve done their job. The unions have had no
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difficultly in putting up extensive witness statements and they’ve
traversed exactly the issues that are allegedly of concern or interest to
the Ministers.
So all of that is going to be traversed before you and now the
laggardly Ministers, who haven’t bothered to participate, now wish to
expand the range of this entire process. Well we invite you to say it’s
not going to happen, because you can’t come and change the rules of
the game. So as to the question of relevance, we just ask a very
simple question; relevant to what, relevant to any case that the
10
Ministers have made? No, because they haven’t yet put up a factual
witness statement or an expert witness statement whereas everybody
else has.
So on the grounds of relevance we cannot understand the case
that they are seeking to make, but they don’t, and this is the tension in
our learned friend’s argument, they don’t confine themselves to the
contention of relevance. No, they tell you that in fact what is required
is that you should get all of this information that they are seeking,
because that would help them to investigate claims. Chair, no party
has got a right to seek discovery to investigate claims. That’s what the
20
Commission, that’s its statutory role.
So under a proper respect for division of powers, these
Ministers must operate within their sphere. They have to form policy
and take important decisions and if they have powers to impose
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quotas on the retail sector then let them exercise their powers. Point
of fact, they don’t have those powers, but when they come into this
realm they must respect the principal investigative agency. And if
they have something to add by way of what policy implications this
has and how it might affect the aspects that they postulate then put up
your witness statements. Come and say what you have to say.
What we have is Prof Levine saying we’ve run our own
process and it’s run out of steam and now we want to engage this
process and please gives us thousands, probably hundreds of
10
thousands of documents so that we can now engage an investigative
process under the mantle of the competition process. Well we say it’s
not possible. It’s not competent. It’s not lawful frankly.
So Chair, we therefore submit that there are two fundamental
obstacles to what the Ministers are seeking here by way of this
discovery question. The first is that is flies directly in the face of the
limitations that you have imposed under the terms upon which you
have permitted them to come in. They came in on the basis that they
were engaging a process where the rules had been set. No discovery
was being allowed to parties. Everyone had put up their witness
20
statements. We were ready to go. Well we are still ready to go.
Theoretically nothing has changed. The fact that a stay application
was made with no merits, as you yourself found, doesn’t change that.
Everyone was ready to go and that is the baseline. So now why does
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the Minister have any claim to anything? Well he hasn’t. He’s got the
claim to nothing more than what you allow, which is that you put up
an expert statement and he get the data that the RBB report relies
upon and for the rest he must look to the enormous wealth of
information that is already before you by way of the record and all the
exchange of witness statements that has occurred.
At least he then puts up his witness statement and then if there
is something that he can compellingly come to you to say is necessary
to you, to them and is narrowly tailored to some specific issue, well
10
we could at least then meaningfully engage with that proposition, but
at the moment it’s just a trawl. Let us think of every single
conceivable piece of information we can think of that might help us to
cross-examine a witness or to put together a report and that’s what
we’re entitled to do. Well we say that the boat has long since moved
on as far as that’s concerned.
Chair, just to give you a sense of just how non-particularised
the Ministers’ concerns are, in their February affidavit you will see in
paragraph 14 they set out a set of broad topics, as they were, and the
predicate it all, or at least with candour and saying “it is therefore
20
necessary to investigate whether a merger could be expected to have
a notably deleterious effect on any sector or region. In the present
case one must therefore look not only at the retail sector but also, and
even more critically, at the effect on the turnover and profitability of
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supply industries such as food, electronics, hardware, clothing and
footwear.”
They then go through employment and they go through small
business and at this high level of generality they say “well this
merger involves these things and it would be important to investigate
these matters.” Well those of us who have been living with this
merger for rather longer perhaps than the Ministers, yes, we all accept
that these are relevant issues in the merger, of course, but you can’t
seek discovery for investigation. It’s not a competent thing to ask for.
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So Chair, we say on the two grounds, one, you’ve made a
limited order as to what is permissible. They must live with that.
There is no application before you to review or revise that order.
Secondly, that order sits upon a foundation of the rules of the game
that were determined in the first pre-hearing conference. No one has
invited to you revisit the premises upon which that took place. And
the reason that no-one has invited to you do that and sensibly so is
that once the foundations upon which we are engaging with one
another in this merger, not because it’s a matter of convenience to the
merging parties, those were the rules that you set, those were your
20
determinations. Once you start pulling that apart, well various things
are likely to happen.
So what we will get if you were to allow this rapacious
discovery, actually requests for interrogatories in respect of
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investigation would be a more apt title, then of course the next thing
that we will get is that the unions will, insofar as there is any part of
the universe that is not covered by this request, they will put up their
own request. And what grounds will the Tribunal have to resist that,
because then it becomes a question of, well, if it was good enough for
the Ministers, it must be good enough for the unions. Then we will
have to put up our discovery request so that every single expert that
has come for the unions and has made all sorts of claims, there are no
doubt pantechnicons of documents that underlie all the things that the
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unions are saying.
When the Ministers come and talk about whatever they wish to
talk about, when they finally tell us what it is that they want to
actually raise, we know, because it’s figured in the requests made by
the Commission that although the Ministers are being extremely coy
about what their actual position is beyond the things that they find
interesting to investigate, we know, because the Commission
requested it of the Ministers, that they wanted a study. They
commissioned a study by experts and the Commission, it’s in our
answering affidavit in the postponement application, but on the 21 st of
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December it was requested by the Commission, “kindly be reminded
to provide the report or a study prepared by your department on the
abovementioned transaction.”
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Now it exists. So they have been busy with some study, but
instead of doing what you would expect, which was to say, well,
we’ve got a study, it existed at or before the 21st of December, we’ll
use that and put it up as our witness statement, nothing is
forthcoming. So of course, that will entail all sorts of investigations as
to what their experts had been studying and where they’d got to with
the transaction and so on.
We posit these things, Chair, because none of it is sensible. It is
not sensible in an engagement on issues around public interest of the
10
order that are here registered before you in this merger to start
engaging the process that the Ministers want. We know, because we
now understand from this discovery exactly what they have in mind.
They want to do the sort of thing that goes on in courts of law. They
want to confront a witness and say, you say that you had the
following matters settled in the following countries in respect of
labour matters. I put it to you that there were not 17 settlements in the
New Mexico District Court, there were 24 and I can show you that
because we got discovery of every single time an employee in WalMart took Wal-Mart to the Labour Court.
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Of course, if we had years to engage these matters, no doubt we
could track down every labour violation that Wal-Mart had ever been
alleged to have committed and we could see how it was disposed of in
every jurisdiction in which they operate and we could investigate the
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merits or not of their conduct. How would that help you if it’s one
wit? The answer is that recalling that Wal-Mart is the largest private
employer in the world and has 2.1 million employees, if we took the
average number of labour disputes that an employer of that size
engages in and we sought to investigate the merits of those matters
over the last 10 years, I venture to think we could spend years on that
matter alone, and it wouldn’t help you at all to resolve the merger
before you.
So, as you put it Chair, when we first came to see you at the
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prehearing, it’s not sensible to have an engagement on public interest
issues in that way. It is inevitably a more broad-brush process and so
when you come to look at this request, which I shall do in a moment,
you will see just how ill-considered this is. We have no difficulty and
this is why we make the point, that for the purposes of Mr Hodge,
who it appears to be the appointed expert for the Ministers, to have
the usual engagement with his colleague, Mr Baker, on the basis that
they exchange data one with the other, of course.
And that is why far from the allegation that is made that we
have not sensibly engaged with the request that they have made,
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we’ve made it clear what the basis is upon which we respond. We
have said in our response that we are making discovery and tender it,
which is relevant to the expert evidence contained in the RBB report.
That’s what we said in our response at the top of page 2. Well we said
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that for a very obvious reason, which is that that falls within the scope
of the basis upon which the Minister has been permitted to participate
in these proceedings.
We understand that and it’s for that reason that those issues are
properly engaged with and we, it appears unlike any of the parties,
save for the Commission and Ms Engelbrecht’s client, we are trying
to stick to what you have ordered. We had our reservations about it,
but what we supported it ultimately, because we thought it would
move the matter forward and we are trying to stick within the four
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corners of what you have determined, but the Ministers are not
content with that seemingly, and yet they are not asking to recall any
of your orders and they are not asking you to revisit the basic
premises upon which this merger is going to be heard.
So we simply ask you to enforce the orders that you have
made. Chair I have some submissions to make about some of the
detail on the documents, if we could perhaps have a short
adjournment.
CHAIRPERSON: Alright, let’s come back in 15 minutes.
Adjournment
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On resumption:
ADV UNTERHALTER: ...the detail of what here has been sought,
obviously understood in the light of our submissions and the
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applicable principles of discovery, which require consideration of
relevance and utility in the light of what has already been put up.
Could I draw your attention firstly to two features of the definition
section? The first is the rather specialised concept of “locally
produced”, which appears to be the one favoured by the Ministers.
Now there are actually extremely complicated questions around rules
of origin in respect of trade questions that no one agrees about and
great volumes have been written about.
The fact of the matter is that the Ministers have chosen or their
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departments have chosen to adopt, under advice no doubt, a particular
view as to how they understand “locally produced”. Now whether that
has any relationship to the way in which, for example, Massmart
records what they consider to be a locally produced piece of
merchandise that they acquire, has not even been given consideration
to. So when you seek discovery, you can’t seek discovery on the basis
of things you would like merging parties to investigate so that they
can go about and generate data that would then be interesting for you
to investigate.
You have to know of a document or suspect that a document
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exists. It’s got to exist in the world for you to request it by way of
further discovery, or in this case, discovery. So you can’t, as it were,
adopt a definition of “locally produced” and say we observe, as our
learned friend pointed out, that Massmart uses a different concept of
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“locally produced” for the purposes of its own internal definitions and
record keeping and say, well we don’t like your definition, we don’t
care that that’s how you reflect “locally produced” in your own
documentation, would you kindly go away and under our definition
of “locally produced”, which is at variance with yours, kindly go and
produce documents.
If you were engaged in an investigation you could start by
debating what “locally produced” means. You could have learned
engagements on rules of origin and whether something comes from
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China or comes from Indonesia via China, or because it has three
South African components then it is a South African produced good.
Yes, we could have that engagement, but it’s not relevant to seeking
discovery. We don’t have such a system, which allows us remotely to
know when Massmart buys a refrigerator from a local supplier, some
components of which may have come from another jurisdiction. We
have no way of knowing. Yet you will see when we get there, that in
the discovery request they are seeking, as it were, our procuring of
information around how something under their definition of “locally
produced”, whether such is bought in certain proportions or not.
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To undertake that enquiry of all the thousands and thousands of
lines that Massmart buys, that Wal-Mart buys under their definition
of “locally produced”, well I have doubt if we put thousands of
people to work on this project for months and months, maybe years
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and years, perhaps we could derive this information. It can’t be
sought by way of discovery. It’s not discoverable under their
definition. If they said, look, this is a widely utilised definition, we
know your systems operate on this basis, press the right button and
give us this data, it would be an entirely different matter. So,
Massmart can’t do it. Wal-Mart can’t do it. They’ve conjured up this
definition. How do they even begin to think about discovery in that
way? That’s the first submission.
The second submission is they say any reference to Wal-Mart
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includes references to ASDA and all other subsidiaries of Wal-Mart.
So without limitation they are wanting Wal-Mart to scour its
databases throughout the world, 15 countries and that database is vast.
And they’re saying no, no, no, as my learned friend did, you can help
us with this, help the Tribunal with this. It shouldn’t be too difficult to
do. No, it’s not difficult at all. There are just, you know, tens of
millions and millions of documents that would have to be gone
through for the process that they contemplate.
So again, it’s just hopelessly, hopelessly overbroad and
untargeted and part of the part of problem of course is because it’s
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investigative and it’s interrogatory in nature. If they had a case that
they defined, then they would know what precise documents they
might sensibly ask for, although as I’ve indicated, that is not
something which is regulated under the terms of engagement.
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So again, we say you can’t … the whole approach to discovery
is misconceived in the definitional terms in which it is set out here in
1.1 and 1.2. I’m also instructed, Wal-Mart doesn’t maintain a
centralised database where all Wal-Mart stores’ information flows
into some super computer in the United States. It operates as most
companies do. They’ve all got their systems in their countries and
they run their data accordingly. So it’s hopelessly overbroad.
Then in 2.1 they say “any and all complaints, orders,
judgements, awards and decisions in respect of Wal-Mart’s activities
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relevant to competition matters in any and all countries for the past
three years.” So this means any activities relevant to competition
matters, I mean not just in the economies in which Wal-Mart has
invested, but presumably anywhere they might buy things, they want
this, in any and all countries for the past three years. It is so vague,
broad and hard to understand what is actually being considered.
Which Wal-Mart activities, in respect of what competition matters?
But apparently anything that is incidentally connected to any
competition matter and in respect of any complaint anywhere in the
world, they want. It is simply not possible. I mean, imagine
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practically speaking how you would do this. I have no conceptions…
ADV BHANA: Chair, we don’t want to be obstructive, but these are
typically the kinds of reasons that should have been put in terms of
your directive. If we’re now going to go on hearing evidence at length
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from the bar, my learned friend Mr Unterhalter must be sworn in to
testify to any of this, none of which we’ve been appraised of, despite
a pure resistance…
ADV UNTERHALTER: Chair, just to be clear, until a party says why
something is relevant, we are not required to … no answer is
required…
CHAIRPERSON: Just carry on.
ADV UNTERHALTER: Yes, so if I may and just try and give you a
sense of why this is … they must just go back to the drawing board
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on all this. Similarly we have the copies of these judgements. Now
here is another, in our respectful submission, opportunistic effort to
secure discovery. What happens in Mr Bond’s statement is there are
numerous allegations that are made in the witness statements of the
union witnesses, concerning various matters around labour and other
issues involving Wal-Mart.
Mr Bond makes some specific responses and what is then
sought is not all the judgements that the unions have raised in their
witness statements from the unions, but they now seek it from my
client. So Mr Bond makes a limited response to this, but now it is
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every single judgement or court proceeding in respect of a 2.1 million
employee base of Wal-Mart throughout the world. Again, we ask
some practical grasp on what is possible. How can that have any
relevance?
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We make the further submission that going back to the focus of
what is meant to be at stake here and what is meant to be the
Ministers’ concern, which is around procurement, not labour, what is
this all about? Now we heard from my learned friend where he said,
well, they did tabulate labour and small business issues. Yes, we
know that this merger raises potentially some of these questions, of
course, but what are the Ministers and their departments specifically
concerned about? Let them come and say what it is then we can have
a sensible conversation. So again, it is hopelessly overbroad and
10
couldn’t sensibly be engaged and will yield nothing of helpfulness to
you, because this is purely a matter of responsiveness to the union’s
position.
Then we have in 2.3 “all documents relating to its claims,
measurements of and methodology in support of Wal-Mart’s
contentions on local procurement” and then it gives these various
countries. Now the question is which claims? Which claims are they
now wanting to specify here? It’s so broadly framed that we can’t
discern what it is precisely that they’re after. We know that there is a
specific reference in Mr Bond’s statement in paragraph 3.2 where he
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says “as a result of their relative competiveness the majority of WalMart’s products are sourced locally. For example, in Mexico, India
and Chile more than 90% of products are sourced locally.” So that
proposition is raised.
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Now they don’t say what their dispute is about this. What they
are now seeking to do is again under their definition of locally
produced, which is special to the department’s case, although not
motivated in any particular way, they now want us, to the extent the
claims of locally sourced included products imported through local
agents as per the definition of local procurement, which is the point
we’ve made above. Then in addition the provision of data for each of
the countries sited in paragraph 32.1 in respect of the proportions of
products that are locally produced, in other words, under their
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definition.
Now we say to get discovery you have to say well I have some
reason to suppose that there are documents that reflect this position in
these various countries and it can somehow helpfully take me
somewhere in respect of case that I can make.
CHAIRPERSON: Mr Bond says he’s got this figure. Where does he
get it from?
ADV UNTERHALTER: If they had said we want to know what the
basis is, it would be hugely a matter for cross-examination, but if they
said is there a source document underlining the 90%, we could
20
understand such a claim. But there is nothing. They haven’t yet got to
the point where they put it in issue, but they think it would be
interesting to know and maybe they would be interested to ask Mr
Bond a question about it, but they don’t delimit anything along those
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lines. It’s just we’ve got our definition, go to all of these countries
and procure data across these various criteria in accordance with our
definition. It’s not permissible, hopelessly broad and in respect of a
definition where they have no reason to suppose it’s related to any
document that we ever have.
Then we have the same thing happening in 2.4 where we have
said that in respect of RBB report we will provide the documents that
underline it, but again they have their own filter that they want to
apply, because they want to do it in terms of their own definition of
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“locally produced”.
So we have in Mr Baker’s report in table 10 the growth of
imported and domestic goods in respect of Chile and the source is
given and the data is reflected and we’ve given them that data. So if
there’s some other data referred to in that data, let them tell us what it
is. We’re quite happy to dig down if the level of data that has been
given suggests other data in that data, but that’s not what they’re
asking for. They’re saying you go and instruct your people in these
jurisdictions to go and procure data in respect of our definition of
“locally produced”, which as I’ve said is apparently uniquely framed
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for their purposes and they have … well, I mean, we cannot see how
it can be done, but I mean the fact is that it can’t be asked, let alone
can there be any suggestion that we should be put to this task, because
again they’ve mistaken the relationship between identified documents
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and putting people to work to produce things that might be of interest
to you.
Just to reinforce the proposition, which is that when you buy
from a company, I mean it’s no different from anyone in this room
going into a shop and buying. I mean I don’t know how the
components are put together, and yes, no doubt great investigations
would yield this, but it’s not a document that can be done, that can be
just produced in the way that they suggest.
Then in 2.5, again in respect of DNS in Chile documents
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containing data for the past three years on employment, I mean just
employment, I mean what, the salaries people get, the leave
applications that they’ve made, who knows? I mean RBB has said
nothing about employment. So all that we have is a Minister saying in
February there are employment issues in this merger and so should
we now go and look for every single employment document that
contains data concerning Chile? I mean, no one has thought this thing
through. I mean, how can one ask this by way of discovery?
The split in employment between full-time and part-time
employees, again we say, none of this is raised by RBB, not to the
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point of anything that has been raised by the Minister. Annual
increases in wages and benefits for full and part-time employees,
union membership in total and membership of the countrywide union
specifically. Is the Minister saying that the departments, do they have
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anything that they are wanting to contest about the situation in Chile
concerning unions, or is it just something they would like to, as my
learned friend rather candidly indicated, that they would like to test
people on?
The witness, interestingly, who is referred to here is the
SACCAWU witness, not one of our witnesses. So again, if they want
to ask Alvares to produce what information exists in the union’s
possession, well they can do so, but it wouldn’t be by way of formal
discovery.
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We then have, in respect of 2.6 where we have produced the
documents insofar as they are reflected in figures 4 and 5. So we’ve
tendered to produce what is referred to. Now we read, because this is
apparently where we haven’t gone far enough, “in respect of DNS in
Chile the underlying data and measurement methodology in respect
of the claims made by RBB and late in concerning the JBP program.”
Now at a bare minimum one would need to identify what claims are
there? So identify the specific claim, say you’ve said X, we want to
have the data that underlines the claim, the specific claim that Mr
Baker is making. So as far as we have been able to identify those
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claims, we have provided the information, but you can’t just say the
claims. They can be properly specific and if there is data in respect of
specific claims that are in the RBB report, we will provide the data
concerning that.
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Then we see in 2.7, again without limitation “in respect of all
countries in which Wal-Mart operates, 15 in number, documents
relating to a benchmarking of Wal-Mart against the industry for the
split in employment between full and part-time.” Again, where
employment is relevant to RBB or indeed the departments, we don’t
know “wages and benefits for full-time and part-time employees and
union memberships.” So again they’re traversing what they sought
for Chile now in respect of every single country.
Yes, and as is
pointed out to me, and in every single year. Again just hopelessly, in
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our respectful submission, overboard and not to a particular point that
they can make or wish to make it seems. So we say that that too is not
relevant to anything that they’ve said, relevant to nothing RBB has
raised and without any focus and simply on the broad based basis.
Then we have in 2.8 “both Bond and Patterson refer to global
procurement networking capabilities of Wal-Mart in their witness
statements. Provide documentation including details” and here, it’s
very puzzling “details of the current offices, distribution centres,
assets and personnel of Wal-Mart.” What do they want, the addresses
of the offices, the number of offices, the number of typewriters, word
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processors, how many people are employed in dispatches? I mean one
has only to look at this to say nobody has sensibly applied their mind
to this matter, because how does anybody on the receiving end of this
try and engage with it?
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And “personnel of Wal-Mart that are utilised in this global
procurement network for each country from which Wal-Mart sources
globally.” So there are hundreds of companies out there in the world
and Wal-Mart engages with them and they want to know the details
of their offices and so on and so forth of Wal-Mart that are utilised in
this network for each country. “Also provide the total value of
products shipped annually from each of these countries that WalMart sources globally and a breakdown of value by broad product
category, namely general” and then they give the various categories.
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Now again, I mean they are asking us to put together data for
them. They’re not saying there is a document, we’re asking for that
document, produce it. They’re wanting us to go and do an
investigation and produce some kind of data for them that they’ve
considered to be useful. It can’t be done. You have to identify the
document with some specificity that makes it a permissible claim if
you could locate it somewhere in RBB in a meaningful way that
would allow an expert to respond to RBB, and again, none of that has
been done.
Then 2.9, I think is resolved, 2.10 and 2.11 and 2.12 as my
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notes suggests. So we can move happily through those. There are then
in 2.13 and 2.14, which are cases about … firstly in 2.13, Germany.
Who has raised Germany? Not RBB, not the merging parties. I don’t
recall any union raising anything about Germany. So if there’s an
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issue about Germany then the Ministers and their departments must
say, well, there’s a particular thing that is relevant to our expert and
something concerning Germany, but just representations and
objections to Wal-Mart’s entry into Germany doesn’t yet arise in this
merger and they can’t make it arise simply be saying this is
something that is interesting to us.
2.14 “the total number of individual cases brought against
Wal-Mart relating to any matter involving employment, including
discrimination, retrenchment, etc.” and then “including the number
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of persons in total affected by such cases.” So, if there is a
discrimination case that was brought in Chile and it involves a family
of 20 people potentially, what are they talking about? Affected who?
Which class are they interested in and why? It’s very hard to
understand. Again, what they are seeking is a requirement that WalMart must go and amass information along the lines that they suggest
in respect of employment matters. That again, I’ve made my
submissions, are apparently not ones that have been relevant to the
Ministers and are not traversed by RBB. So we say all of that must
simply go.
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Then if I can go to the next category, which is Wal-Mart in
respect of … documents in respect of the merger transaction. These
species of documents are the very kinds of things, which are
interactions in respect of meetings and the like, which the
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Commission investigates during its process; board minutes, board
packs, that sort of thing. It’s been part of the Commission’s
investigation. They can take it up with the Commission if they are not
happy, but these really are matters in respect of which the ship has
gone as far as that’s concerned and there’s nothing that they can say,
other than that they’re curious about that. What is it about these
communications that is raised in some way that impacts the
departments’ interests? Nothing that we know of.
Just whilst one is observing what this leads to, if you open this
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up, then of course naturally my client’s will say, well that’s fine, you
want to know about all of this from us, we will want to know about
every Ministerial deliberation that’s taken place on this merger, at
every level in government and we’ll get into, no doubt, issues of what
government can and can’t be asked. So it’s all unnecessary. It’s just a
waste of time.
Then 3.3 “Wal-Mart documents dealing with proposals for
increasing efficiencies and/or lowering prices” and all of this, 3.3 and
3.4 these are all matters which have been dealt with in the
Commission process, the board minutes in 3.5, the due diligence, it’s
20
all part of the merger process, dealt with through the Commission
process and there is no warrant to revisit it, unless there is some
specialised matter that arises that impacts on the departments and that
they can refer to in any witness statement that they are going to
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produce. And we say all of this should happen when they have
produced. So we say all of this is about merger process that cannot
now sensibly be engaged.
CHAIRPERSON: Are you saying these have already been given to
the Commission and they’re in the record?
ADV UNTERHALTER: Yes.
CHAIRPERSON: Oh all of them are here.
ADV UNTERHALTER: I’m told, just to be clear, that we may not
have given every single document that is here, but certainly these
10
were categories of documents, which formed part of the engagement
with the Commission in the course of their process and will be in the
record. Now, I’m instructed and I’m certainly not saying that every
one of these is necessarily exhaustibly reflected in the record, but if
there is something that they’ve been through the record and they say,
well we’ve seen this, but what about that, we could look at that,
although it doesn’t relate again to anything that they have claimed a
problem with, but certainly in this form it’s just seeking to redo work
that the Commission has done again without warrant.
CHAIRPERSON: Sorry, just taking the due diligence report, is that
20
there? I haven’t seen it. I may be wrong.
ADV UNTERHALTER: I’m going to take an instruction as to
whether it’s there. If I can then come to the Massmart … I’m told it
isn’t in the record, the due diligence report and if there is something
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that the departments can specifically point to about a case that they
mean to bring, not this general, it might be interesting, we can plainly
look at that document for the purposes of production.
Now in respect of the Massmart documents, they say “any
documents evidencing and/or in support of Massmart’s approach to
procurement and procurement philosophy as stated in 6.” Now as to
this document we’ve said that we’re not in possession of the
documents requested. I’m sorry I’m at the wrong one. I’m at 4.1.
Sorry, if you’ll just bear with me for one moment, I just want to make
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sure that I’ve got … I’m told that certain of these documents are
undoubtedly on the record, but we cannot again see where the
relevance is. I mean a specific note was made, as I recall my learned
friend’s argument, about the procurement philosophy as detailed. So
what is said in the affidavit is “at the outset it is important to note
that Massmart does not have a formal procurement policy, rather its
procurement philosophy is based on good retail practice. Most
importantly this document is focused on diversity of supply.” And so
what they are saying is, well, we want documents about this
philosophy.
20
It’s again a typical instance where a lawyer has just gone
through a statement and said I see there’s reference to philosophy,
well, we’d like to know what book underlies the philosophy. Are they
making an issue out of the philosophy? Is it in dispute? They must
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make out a case. When they’ve made out a case of some kind, then
we can engage sensibly in the debate.
CHAIRPERSON: Well, it seems to me, having gone through the
Massmart material, that there is a lot of material that deals with
procurement scenarios and sometimes a very micro, it goes down to
the particular division level and sometimes it’s at a more macro level,
pardon the pun, but the procurement, to the extent that one can call
procurement a matter subject to philosophy, it appears to be in those
document, in reasonably contemporaneous and reasonably detailed
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form.
ADV UNTERHALTER: And I mean to that, you know, the witness
will come. We’ll speak to it. If they want to know more they can ask.
And here it’s sort of every document that Massmart envisages to
procure supplies from and all and any market research documents in
support of Massmart’s procurement philosophy. Again, it’s seeking,
as it were, to just develop this subject beyond anything that is
warranted in relation to the simple statement that is made by the
responsible person who is going to come and give evidence.
So if one looks at this claim, it says “documents evidencing
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and/or support of the variety of sources that Massmart envisages to
procure supplies.” So I mean potentially that means every single
procurement, every invoice, every delivery note, “and then any
market research documents in support of the philosophy” again it
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seems just unfocused and hopelessly wide. “Any documents
evidencing and/or in support of Massmart’s local procurement
strategy as detailed”, again, you have to hone this down to something
that is particular, some document that goes beyond what is said,
which is supposed to exist, which might have a bearing on the matter.
And is it in issue? I don’t know that the philosophy or the strategy has
been placed in issue by the department.
“Any Massmart procurement department document that details
the imported goods strategy of Massmart”, this is just really
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repetitive effectively and the same observation is made. “Provide
details of the current offices distribution centres”, well we’ve made
our observations about that. It’s the same string that they’re seeking
of Wal-Mart. They want to know how many paperclips are stored in
an office in respect of the distribution centres, assets and personnel of
Massmart that are utilised for direct imports. What that asset register
is, what usefulness it will serve again is entirely unclear.
“Provide further information in respect of Massmart’s
development” and this is again, one has only to look at the form of
the rest “provide information, further information” not a document,
20
“in respect of their development and use of suppliers in particular
SSME and historically disadvantaged suppliers”. It’s not a document
request. So again, in trying to explicate, as Mr Patterson has done, the
approach of Massmart to SMMEs and historically disadvantage
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procurement, they are broad statements, entirely in line with the
philosophy – dare I use the word – that was enunciated by the
Tribunal when the ground rules were set and now there’s this trawl to
try and find every document that could conceivably relate to those
suppliers, again, just vastly overbroad and to no point.
4.6 “a document providing a breakdown of sales, direct import
and local content by major subcategories of the products listed in 7
and 8” and presumably, I don’t know if local content here bares a
relationship to the locally produced definition, presumably not. But
10
again, in respect of 7 and 8 we’ve given the underlying data and more
than that we can’t do. That is what we have. That’s what Mr Baker
relies upon and we can’t be more helpful than what we have done on
that score. The strategy document, “the Mass Build strategy
document 2010 regarding home improvement shares” that’s in the
record and 4.8, I’m told that that’s in the public domain or has been
provided.
CHAIRPERSON: 4.8 is in the public domain.
ADV UNTERHALTER: That’s been provided. And then lastly, in
respect of 5.1 here if one could just take this one…
20
CHAIRPERSON: Sorry I didn’t hear on 4.8, you say it’s been
provided?
ADV UNTERHALTER: I’m told…
CHAIRPERSON: Or it’s in the public domain.
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ADV UNTERHALTER: I’m told the retail analysts, the asset
managers, the shareholders and the Massmart senior managers, all of
that is publicly available and it’s on the Massmart website. I think all
that then remains is that there are board documents. Now I think there
were board packs, which formed part of the Commission ... board
packs and strategies were provided to the Commission as part of the
merger filing. And the question is with all of that, what more could
they really sensibly want under 4.8?
Then under 5.1 “for the top and bottom 10 locally produce
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products by rand value purchased by Massmart in 2010 in each of the
categories listed in 7 and 8 of the RBB, the ex factory price, ex VAT
paid by Massmart to the local producer and the likely lowest
delivered price to South Africa from Wal-Mart’s global suppliers.”
So there are a number of components to this. The one is it’s the
department’s definition of locally produced, which is peculiar to them
and is no part of the way in which Massmart procures, as against a
judgement that has to be made about the likely lowest delivered cost
to South Africa from Wal-Mart’s global suppliers.
So we must go and do this comparability analysis and
20
undertake this and then produce the data for them. It’s not a
discoverable document. That is a request to have us do an analysis
that they consider would be useful. And it’s, I’m told, a complex,
highly detailed study that would have to be commissioned for that
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purposed and it can’t lawfully be sought. You can’t ask a party to go
and study things, investigate things, procure data. You can ask for a
document if it exists and then identify it.
So we do submit that this has just not been properly thought
through and at every single level these departments need to go back to
the basics of what this is all about. The rules of game are set, the basis
of their participation determined, nothing is revising those by way of
a discovery request. The failure to put up a case, there is no
possibility of determining relevance, because there is no case that has
10
been put up and then a discovery request, which is largely a matter of
seeking to find documents that they think would be of interest, (1) for
investigative purposes, (2) so that they can think about how to frame a
witness statement if they ever produce one; and (3) because that
would then help them in a wide-ranging cross-examination that was
never contemplated under the rules of engagement.
We respectfully suggest that they go back to the drawing board
and consider a proper remit of this matter and their involvement in it
and we would ask that you dismiss the application with costs,
including the costs for two counsel.
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CHAIRPERSON: Can I go back to 5.1, because that seems to be an
exercise that is highly pertinent to some of the issues that I think Mr
Baker has raised? Now you’re saying that this information can’t be
found, and Mr Baker has obviously been given some information
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which he finds in the tables, I think 7 and 8. So it’s not clear to me
why … I know there’s a debate around locally produced and we can
hear Mr Bhana on that, but assuming that one even adopted his
definition of that or they said, look, we purchased this from Tiger
Brands and you can take your own view as to whether it’s local or
not, because we can’t tell you anything more. We purchased this from
this client. Presumably they can give those … within those categories
being sought, they can give that information and from Wal-Mart’s
side are they not able to give an equivalent procurement price? Let
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them do the … and I’m not asking Wal-Mart or Massmart to do the
arithmetic as to what the Dollar price would be and what even the
transport costs would be. Maybe the department’s has got to do is
own, if Wal-Mart doesn’t have that handy, but can that information
not be given relatively easily?
ADV UNTERHALTER: Chair, it comes fundamentally to this point
about locally produced. If I could just take you back to the definition
“locally produced is defined as products, which involve local
production and value add, even if some components are imported in
the process.” Now if I might just pause there, what does that mean?
20
Does it mean if a car is imported and one or two local components,
the fan belt is inserted from a locally produced fan belt, is that in or
out?
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CHAIRPERSON: I’m trying to get away from that controversy. I
mean I take your point and I understand what you’re saying. What I
think is that you give the product that you consider to be local
produced and say who you got it by. If the departments disagree with
it or have got an issue with it, then they can make something further
of it, but you do your best, as it were, in a sense what Mr Baker has
done. He said, look, people have said to me they spoke to
merchandisers and they said and therefore I made that conclusion. So
I think that’s really what we can expect from Massmart to do.
10
So in a sense they’re saying, this cola drink, this iron, this shirt,
etc, etc, we’re classifying as local produced, we got it from so and so,
that’s our understanding in our terms of the thing. In other words, it’s
not what you considered it to be, but what we think is locally
produced.
CHAIRPERSON: Chair that is exactly the exercise that Mr Baker has
sought as best he can to do with the assistance of Massmart. In other
words, Massmart’s definition is that if they buy from somebody who
is a local supplier, i.e. they have an office in South Africa, they don’t
themselves directly import, then they treat it as locally produced
20
under their system. So now we know that that can involve a huge
variety of different states of affairs from something that is wholly
produced in South Africa to something which is simply imported by a
domestically domiciled importer.
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Under Massmart’s definition and I speak subject to correction,
but that’s my understanding as to how they classify locally produced,
and that’s all that their systems can yield. So the only other exercise
that you can do and Mr Baker has sought to do it as best he can, is to
make certain kinds of estimates, but it’s an estimation exercise not in
respect of data that exists, but in respect of judgements that are made.
Now, plainly when the witnesses come these matters can be
debated and best judgements can be given, but that’s not an exercise
that can be done simply by saying, I access this database and here is
10
the data there and I compare it with the Wal-Mart database and we
can meaningfully compare like with like to get a view under a
definition that may be of interest to the Minister, it may indeed be of
interest to the Tribunal, but it is not the way in which data is collected
and stored.
So of course, the suppliers, one could go to a supplier and one
could say, well are you just inserting the fan belt and the sparkplug
and how much of what you are now selling is locally produced or
not? But Massmart can only make an estimation and it’s done the best
it can to make that estimate and that’s what Mr Baker has reproduced
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here. So we don’t understand how the exercise that is being
contemplated in 5.1 can be done simply by reference to existing data
or documents and that’s why there are just limitations to the exercise
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and we’ve sought to engage it as best we can in table 7 and 8 of Mr
Baker’s report.
It’s pointed out to me that on the Wal-Mart side it’s an equally
hypothetical exercise that is contemplated. So, again it isn’t an
existing database, but it’s the likely lowest delivered price to South
Africa. I mean, Wal-Mart is trying to merge with a company here. It’s
not importing things into South Africa. So, they are asking us to
engage in an estimation exercise, which isn’t in respect of any
existing data. I understand Mr Hodge may find that a very tantalising
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prospect if it could be done, but we can’t do it. They can’t do it and
we are stymied as to how we can be required to produce something
that doesn’t exist in some database that we can just go to and produce.
So, that’s our difficulty.
CHAIRPERSON: And I will be corrected by Mr Bhana if I’ve
misunderstood this exercise, but if you could say, look, a pound of
sugar purchased here costs you X Rand and Massmart has that in its
database, Wal-Mart international procures sugar from somewhere
international and it can at least give a Dollar or a Euro value to what
that is and I think we can debate as to who should add the transport
20
value, but the exercise says is it likely that they would substitute or
not with that product from India or China or wherever it is coming
from.
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ADV UNTERHALTER: Chair, there are perhaps three levels of this.
If Mr Hodge, if he be the person, when he comes to actually put
together his report and he needs ... he will determine certain prices no
doubt in respect of South African produced goods. I’m sure he will.
Massmart clearly buys products in all sorts of categories, which have
no local content, some local content, but it’s incredibly hard to
estimate, because I’ve given you the definition from Massmart’s side
as to in its own database what counts as local and what doesn’t.
So, for the rest it’s a question of estimation. So, in an
10
information request it’s not clear how those judgements are going to
be made, because it works under a definition that is not part of the
way it collects data. So, I don’t know how that is to be done. If there
is a category of product that is identified, which everybody accepts is
only locally produced. Perhaps sugar is an example. Well, it’s not
very difficult for the Ministers, if they wished to, to go and find out
how much you can procure sugar for, but I mean that’s really not the
thing that they are concerned about. What they are concerned about is
under their definition of locally produced what is the proportion of
local production.
20
Chair, frankly this is clearly part of a Ministerial, and one
understands it entirely, it is highly relevant to important policy
questions for the country, but it’s a study that economists and the
trade statisticians in the country no doubt do all the time as to what is
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the relationship between local production and imported content, but
it’s not something Massmart can do and on the Wal-Mart side what is
one to estimate? No doubt there are figures as to what Wal-Mart in
Chile procures sugar for, but the ex factory gate price is not going to
tell you much, because you then have to work out, well, if Wal-Mart
procures sugar in the Caribbean and it then supplies it to its stores in
the southern states of America, how is that helpful to work out
whether it could be an import substitution for locally produced South
African sugar? One would have to make calculations ask to where
10
does Wal-Mart procure sugar that could, once you’ve computed
relevant transport costs and the like, come into South Africa. That’s
an exercise for experts to engage in and think about and produce
numbers, but it doesn’t exist in a database.
So, if there is something that exists in a database that is
relevant to Mr Baker, well, we can try and be helpful, but not the
exercise that is contemplated in 5.1. It’s literally not doable. I mean,
we don’t ... all that we could say about that is that it’s not there and
we don’t have it. If one looks at likely lowest delivered price, I mean,
what is one to do, just again practically? Assuming, to use your
20
example Chair of sugar, well, I’m assuming, I have no knowledge of
this, but let’s just assume sugar can be procured in the Caribbean, it
can be procured in other parts of Africa, it can be procured in Europe
from beet and it can procured in certain eastern countries. Which is
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the likely lowest delivered price? Well, you would have to work out
what are the shipping and other costs and tariffs and all the like and
all of this fundamentally is a function of trade policy.
Now, I don’t underestimate at all that it’s a hugely important
thing and these departments probably spend years and years thinking
about these things from a policy perspective. They should produce
their data and help you, if this is a relevant enquiry, but we don’t have
it. How can the responsible departments whose competence it is to
employ many skilled people to engage these questions from a trade
10
policy point of view for the country, if they have this, let them come
and give it to you. We just don’t have it.
CHAIRPERSON: Mr Bhana?
ADV BHANA: Chair, I’m not sure if you wish to hear from any of
the other parties.
CHAIRPERSON: Well, none of the other parties are party to this
application, unless they want to correct me on this.
ADV KENNEDY: Chair, if you will permit us just to take literally
three minutes, just to give our own input on this, Mr Chairman. The
unions are affected by certain of the requests and we would support
20
those requests to the extent that they deal with the specific
information that do relate to us. What we would submit, Mr Chair, is
that in relation to your ruling in respect of the requests that a decision
be taken with a view to facilitating access to information that is
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indeed relevant and information that can indeed be provided and
should have been provided by the merging parties from the beginning
through the Commission and to the Minister when that request was
made, and now. We don’t believe that there is any legitimate basis to
refuse particular items of information that are particularly relevant.
If I can give you an example, paragraph 2.5 of the revised
request relates specifically to DNS in Chile and request documents
containing data for three years on employment. Obviously what’s of
particular
10
concern
is
employment
numbers
there,
splitting
employment between full time and part time employees and annual
increases in wages and benefits and then also details as to union
membership. We’ve had a chance to look at the statements of both
Mr Alvares for the unions...
ADV UNTERHALTER: Chair, I’m sorry to interrupt my learned
friend, but I thought he was going to make some general, broad
observations, which we don’t have a difficulty with. The unions are
not applicants. If they wish to bring an application contrary to all the
agreed terms, they must do so. You can’t seek, as it were, to motivate
the request of another party in your own interest.
20
CHAIRPERSON: I agree with that. I don’t know why the unions
didn’t ask for this info, if they had wanted it, they could have
advanced it at a prehearing stage, that’s normally when we would
deal with these issues.
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ADV KENNEDY: I’ve made a simple point, Mr Chair. I respect the
ruling. I’ve made the point that we are affected by this. If a party is
affected by this and it’s going to affect the conduct of the case and the
way that we are able to cross-examine, for example, Ms Layten,
where she has given vague generalities and where the ministers have
legitimately asked for specific data, we would support that request.
We are affected by it and so is the Commission.
CHAIRPERSON: Does anybody else want to say anything? Mr
Mtshaulana?
10
ADV MTSHAULANA: Chairman, we would like to make one or
two remarks, which are general remarks. The first general remark, Mr
Chairman, is that we would urge that in deciding this application the
Tribunal should let itself be guided by the principle that merger
applications should be conducted as expeditiously as possible and
arising from that, we would like to note that the Commission has
supported an application for a limited postponement to a date not far
off, because it believed and still believes that it is important that in
this process there must be more participation, public participation,
especially by the ministers.
20
But having said that, it is important that in handling this
application the Tribunal should strive as much as possible to avoid
irrelevant issues, which will cause a delay to be taken into
consideration. For example, the issue of the role of the departments,
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we believe that that issue has been decided by the Tribunal and that
matter must not be reopened again. If anything, the matter must be
handled on the basis of the ruling of the Tribunal.
Now, in that respect we do not agree 100% with my learned
friend on his interpretation, because we believe that the Tribunal has
made a ruling to the effect that on the basis of the information before
it, it will allow the expert evidence from the government. You have
not closed the possibility of an application, although you did indicate
that it may set some thresholds if such an application is made for
10
evidence for facts but let us not force the Tribunal at this moment to
make such a ruling before the government has made an application
for bringing evidence, which is factual.
In general we believe that the Tribunal should allow itself to be
guided by the principles it has developed in general on applications of
this nature. Now, in the Meshco case the Tribunal decided that it tried
as much as possible to deal with these applications informally but
fairly and we submit that that fairness should be fairness to all the
parties involved in these proceedings. In other words, the Tribunal
should, as far as possible, be even-handed.
20
The main issue really should be that all documents that have
been requested, especially those that have been referred to in the
papers, in the pleadings and affidavits, inclusive of those documents,
should be discovered. We say in principle, because the Tribunal has
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to be fair and look at the specific circumstances referred to by the
parties or the party affected.
Again, another principle that we would like the Tribunal to take
into account is the principle, we believe, one can find in the Avalon
case, namely that where documents relate to or belong to a genus, a
group, not each of the documents requested is necessary to prove the
pattern, the behaviour and the conduct, as was in that case, and in the
interest of expedition, the party from whom documents are requested
should not be unnecessarily burdened to disclose or produce all those
10
documents, if the conduct or pattern could be dealt with with the few
documents that have already been produced in the record.
Now, in paragraph 9 of the Meshco case the Tribunal did rule
in that case that the same principle will apply, that the inference of the
existence of a document is not sufficient to create an obligation to
disclose such a document. Now, there are some requests where this
principle might be useful for the Tribunal to apply, some of the
requests that have been made.
Now, lastly in relation to paragraph 3 of the requests and just in
order to help the Tribunal, my instructions are that the documents
20
referred to in 3.1 and 3.2, most of them or some of the documents that
are required there are to be found in items 51 to 53 of the index and
the documents in 3.5, I’m instructed probably some, if not all of them,
will be found in item 76 of the index. 3.6 is not available, except that
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on page 2608 to 2686 of the record there is some reference to some
summary of the due diligence. It’s 2496 to 2498 of the record. I hope
that will be of assistance to the Tribunal.
CHAIRPERSON: You say they’re not available, but I understood that
it is available. It’s just wasn’t sought by the Commission.
ADV MTSHAULANA: Well, is that 3.6?
CHAIRPERSON: Yes, the due diligence report.
ADV MTSHAULANA: At page 2496 there is reference to the due
diligence, but we found that the document that is there seems to be
10
some spreadsheet indicating or summarising what the due diligence
is.
MR WESSELS: So, it does exist, but it’s not in the record.
ADV MTSHAULANA: It’s not in the record. Well, the Commission
doesn’t have it. It’s not in the record.
MS CARRIM: The Commission asked for it.
ADV MTSHAULANA: My instruction is that the Commission did
not ask for the due diligence, except that the items which will be in
that document would have been contained in the documents referred
to in 3.1.
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CHAIRPERSON: Mr Bhana?
ADV BHANA: Thank you Chair. What we’ve heard from our learned
friends for the merging parties is an approach which says we will
stonewall the parties at every turn and prevent giving this Tribunal
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any assistance, which will help it decide very real and very important
issues. We submit you are not going to be misled by adopting that
approach and rather you will adopt the approach that you indicated at
the prehearing, a sentiment which the Ministers share and this is what
you had to say. “This is a merger of enormous importance in the
public interest. It is a merger that, from submissions that we have got
so far, has generated very strong views on either side of the matter
and we cannot believe that we would be doing a service to our role as
the body charged with deciding mergers in the public interest and for
10
the benefit of the public if we did not have an adverse party
participating and assist us in making the best decision. At the end of
the day we must make the best decision possible on the facts”.
To make that best decision, Chair, you will make sure that you
have all of the facts that are relevant and this kind of approach, which
says it’s not according to the rules, which we’ve never quite heard
what those rules are, and that the boat has gone, well, all of that is just
design to make sure that the information that is critical to our client,
critical to our expert and will be critical to you when you consider this
merger, is not properly placed before you.
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You will take due cognisance of the fact that what we have
here is a rushed process in considering what is probably one of the
most important mergers that you have to consider. There is a rushed
timetable, coupled with a deficient investigation by the Commission.
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Now, we know the reasons why they say they investigated the manner
in which they did. We are not pointing fingers, but the reality of the
matter is documentation and information, which should have been
called for by the Commission, has not been called for, and that is why
we are here today having to do this, because that information is not on
record, but it’s information which you will require.
This isn’t the kind of case that everybody becomes functus
officio the minute the Commission files its recommendation, because
you don’t simply rubberstamp that recommendation. You made your
10
own decision based on information that you require and to cut
through all of this, we will deal with the detailed submissions, but to
cut through all of this, you are entitled to call for any of this
information and whether we have a right by virtue of the fact that we
haven’t put up a case, which is simply an incorrect submissions,
whether we should be denied because we haven’t put up the case or
because discovery traditionally is limited to a document and not
information, which ordinarily you would call for, is not something
you are going to allow to deflect your attention from getting to vital
information and information that helps us and you test what has been
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put up in the witness statements.
That approach, Chair, will lead to an approach on the part of
your panel where if there is some doubt that information should be
put up, you will err on the side of providing that information rather
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than keeping it out, because at the end of the day there’s got to be
confidence in the process and that confidence cannot be generated
where we know that there is information that can be obtained but is
being withheld, simply because we are told the boat has gone or
government is not playing by rules. We will address the issue of the
rules in a minute.
So, well aware of your duty, your statutory duties under
Section 16(2) of the Act, you are entitled to call for any of this
information in your own right, whether it emanates as a discovery
10
request from us or anybody else, and this is something that you will
take into account.
But dealing with the so-called theme that we kept hearing that
government has not put up a case, well, government is not here to put
up a case. It’s not necessary to put up a case in the sense of an adverse
party in litigation. It is here to make representations. Those
representations may fall against the merging parties. It may fall in
their favour. So, it is not the kind of matter where you have two
adversarial parties taking opposing positions and a party has to put up
a case before he can ask for matter, as if the matter should be
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approached on the basis of pleadings before a High Court where if a
party does not raise an issue in a pleading, it is not entitled to
documentation.
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Our learned friend, who is vastly more experienced than
anyone else in this room in appearing before this Tribunal, must know
that that is an incorrect approach, but to the extent that a case has
been put up, we are entitled to make submissions on any issue put up
by the other parties in this matter. So, to the extent that the union has
raised labour issues, we are entitled to make submissions on that. It is
not necessary for government to have come and said this is our case
on the labour issues. To the extent that procurement has been made an
issue by other parties, we are entitled to address that issue.
10
But fundamentally what is wrong about this approach is that
indeed on the factual basis, insofar as government is required to put
up a case, it has put up a case. We submit to you it is not required to
do so, but Prof Levine’s submissions of the 28 th of February clearly
indicate the concerns that government has and it says there isn’t
enough information as at that date to fully address those concerns, but
they are very conveniently summarised in ... I can find the passage for
you. It’s paragraph 45. He says the concerns relate to matters such as
the fate of local manufacture and supply industry and in particular
small businesses and BBBEE businesses involved in manufacture, the
20
level of imports, the shape of the retail sector, food security,
consumer interests, labour relations and local ownership.
So, we’ve indicated at a broad level what those concerns are,
but in any event, they have all been pertinently raised by the unions,
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for example, small business in witness statements that have been
filed. So, this entire suggestion that because somehow there is not
some kind of witness statement put up by government on a factual
basis, that it should be deprived of the ability to test the issues that
have been put up by the parties, is completely without merit.
But more importantly if there was any misunderstanding as to
what the issues are or what the case that has been put up in this matter
is, one simply needs to look at the RBB report to see the issues that
they address and they address each one of the issues in respect of
10
which we now seek documentation. So, they clearly address issues
such as the impact on domestic suppliers, paragraph 2.2.2 of the
report, the impact on employment 2.2.3 of the report, conditions
which they deal with at the end of the report.
So, we are really at a loss to understand why this approach,
which is based on the fact that because you haven’t put up a witness
statement from a factual witness as government, you cannot
participate or interrogate any of the issues, which have been covered
at length by all of the other parties’ witness statements.
We then deal with ... let’s take as an example the issue of the
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local content in Mexico. That is an issue contested by Prof
Lichtenstein, who, instead of the 90% contention indicates that it’s
probably in the region of 50%. So, that’s an example. There are
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numerous other examples. We submit that no weight will be placed
on that submission.
Our learned friend then suggested that the government
departments and Ministers have not participated in the Commission
process. Well, it’s another submission that is fundamentally flawed.
Minister Patel is clearly entitled by statute to participate at any level,
even without any direction having been given and it’s worth looking
in that regard as to Section 18. “In order to make representations on
any public interest ground referred in 12(a), the Minister may
10
participate as a party” – I emphasised that this morning – “in any
intermediate or large merger proceedings before the Commission, the
Competition Tribunal or the Competition Appeal Court in the
prescribed manner.
So, the suggestion that is based on the submission to you that
because the Ministers didn’t participate or engage with the
Commission at the first level of the investigation, that the Minister is
somehow precluded from participating now before the Tribunal is
entirely misplaced and contradictory to the provisions of the Act. For
argument’s sake, the Ministers might have done nothing, even at this
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level, and made submissions if a matter came before the Competition
Appeal Court. The Minister would be entirely entitled to do that and
it could never be said that you did not intervene as a party in the
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Tribunal at Tribunal level and therefore you cannot make
submissions.
But the point, however, is and consistent with what you
allowed in terms of your response to the initial request by Prof Levine
and indeed on Tuesday, is that the three Ministers are engaged in the
process before the Tribunal. They are participants in this process and
this very narrow approach, which says that you should be limited to a
case that you put up or because the Commission has not called for the
information you cannot call for it, is we submit nothing more than an
10
attempt once again to try and keep vital information from being aired.
We ask the question rhetorically once again. You’ve told us.
We’ve heard our learned friends say tons and pantechnicons, etc.
Where that information comes from we don’t know, but if you have
nothing to hide, why don’t you tender the information? This is clearly
critical information which should be put up.
Now, I think one also in this regard must have reference to the
tight timetable and when certain events took place in this matter.
There was some suggestion that somehow my clients were remiss in
not participating at the prehearing conference. Well, you have had
20
explained to you by Prof Levine that government favoured an
approach of engaging constructively with the parties, rather than
prejudging the issue while negotiations were still carrying on and
simply making submissions, but the following dates are important.
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The prehearing, as I have it, was held on the 18 th of February. The
record was only provided on the 24th of February. So, until the 24th of
February nobody in terms of anybody from my client and probably
even from the unions had any idea as to what information the
Commission had obtained and what was lacking in the information
that had been obtained.
Even more critically the information that is requested really
became obvious once one read the witness statement on behalf of the
merging parties and in that regard the factual witness statements were
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filed on the 7th of March and the expert report on the 8th of March.
Now, how could government have anticipated on the 18th of February
or before that that it would require discovery when it only received
the record on the 24th of February and it only received witness
statements on the 8th of February where statements are made in those
witness reports, which now need to be tested?
So, nothing will turn on the fact that there was no participation
by government at the prehearing or government did not seek
discovery at any stage prior to the application. Indeed, I will take you
the passages in due course. It is stated by Prof Levine in his affidavit
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that they got an enormous record. Parties were pouring over the
record and within days of getting that record and the witness
statements, it became clear then that an application had to be brought
for further information. The application for further information was
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brought on the 18th of March, merely 10 days after we saw the
witness statements from RBB and the merging parties.
So, the criticism that somehow government has been remiss or
has delayed matters is also entirely misplaced. It ignores entirely the
fact that a great amount of new information was put up by the
merging parties for the very first time in their witness statements that
were put up and now, having done that, they expect to succeed on an
approach which says, well, the Commission didn’t call for this and
you didn’t ask for discovery before you had seen our witness
10
statements and therefore you should be denied information.
In any event, insofar as our learned friend referred to the rules,
which we had great difficulty understanding what exactly he was
referring to, if the reference is to the fact that somehow you made
some sort of ruling on discovery, well, that entirely incorrect, because
on Tuesday you left that issue open. The exchange initially was on the
basis of the postponement and the timetable. Initially you had
indicated that the issue of discovery would be dealt with at the end of
the day. It was then overtaken by the events of the day and today was
decided as the day at which we would argue discovery. So, you have
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made no ruling in respect of discovery. You have made no ruling in
respect of what information my clients are entitled to or not entitled
to.
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But quite to the contrary, what you have indicated is my clients
are entitled to cross-examine and they are entitled to cross-examine
on the basis of factual evidence, which they seek. Otherwise you
render the cross-examination exercise largely meaningless. How do
we test what they say in their statements? Our learned friend of
course would want to be in the position where these broad statements
by Mr Patterson and Mr Bond and Ms Layten cannot be tested. He is
not going to be given that fortunate position by this Tribunal. We
submit you will allow us every opportunity to cross-examining
10
meaningfully and that can only be done if we are given information,
which allows us to test the broad statements that are put up.
Indeed, if there was any indication as to what the rule was or
ruling in relation to discovery, what you had accepted inferentially by
what you indicated on Tuesday, is that you accepted that there would
be discovery. The basis of asking us to come back to you was to
remove the references to those items which were already contained in
the record, which was done. So, we submit you accepted that there
would have to be discovery. The issue was the extent of the
discovery. We indeed removed those items and we added some
20
further items after we have had the benefit of consulting with the
expert that was then engaged.
So, we submit that there is no procedural difficulty or obstacle
in your making the order, but even if that were so, you will not be
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hamstrung by whatever provisional ruling you might have indicated
and nor will you allow that to limit what we now seek.
Our attitude has always been, Chair, that we want to crossexamine the witness on the basis of documentation. We want to crossexamine the factual witnesses on the basis of documentation that we
sought and that remains our position. Indeed, it was the union’s
position on Tuesday that the reason that they wanted a stay was that
they wanted to be in possession of the new information that was
going to come to light when they cross-examined witnesses. So,
10
everybody understood that to be the position.
Of course, there is the dictum that the rules are for the court
and not the other way around. That applies not only to this Tribunal,
but all the more so before this Tribunal, which can call for any
information and make any order, which is relevant to deciding the
issues before it.
Then there was some suggestion that government has somehow
acted irresponsibly by waiting until bringing this application. We
submit quite to the contrary. Government has tried to act in a manner
which was conciliatory to all the parties. It tried to engage the parties
20
to try and resolve issues and it was only when it was clear that once
the merging parties had got the approval from the Commission and
were no longer prepared to engage in bona fide discussions that this
drastic step was required. We refer you, just by way of example, to
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the paragraphs in Prof Levine’s submission of the 28 th of February,
paragraphs 14, 30 and 38.
Then in relation to this issue, we also wish to refer you to the
postponement application, paragraphs 13, 17, 18, 20, 23.3 and
paragraph 30. For example, in paragraph 23.3 this was said already
last week Friday. The deponent, Prof Levine, I think it is again, yes,
says in paragraph 23.3 “thirdly as I also alluded to in the February
affidavit, the merging parties have still not provided EDD and DTI
with all the information which they sought. The relevant government
10
departments therefore continue to be hamstrung in their ability to
assess the public interest impact of the merger. In the circumstances
the relevant government departments consider that they need at least
the information set out in annexure NM1 to the notice of application
and accordingly seek an order granting them access as a matter of
urgency”.
In paragraph 30 of his affidavit “the representatives of the
relevant government departments have identified the documents and
information required at the very minimum in order to conduct a
proper assessment of the public interest considerations, which arise
20
out of the merger. EDD and DTI would have expected some of these
documents to have been provided in response to the request of 28
October 2010, but the existence of many other relevant documents
has become apparent for the first time from the witness statements
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filed by the merging parties”. So, the criticism that somehow
government sat back and did nothing, we submit, when one looks at
the facts, is entirely misplaced.
Then we heard the submission of the wealth of information put
up by Wal-Mart. Well, I’m not sure if we are looking at the same
record, but to us there is a draft of information put up by Wal-Mart.
We found nothing more than three or four Wal-Mart internal
documents. There may be one or two more. I don’t suggest the list is
exhaustive, but there is certainly not a wealth of information of
10
internal documentation from Wal-Mart.
One must of course exclude all of the general marketing reports
and types of things that are put up, but in respect of the internal
documentation that we seek, very little, if anything, has been put up.
The list seems to be there is the turnover of IPL in South Africa, then
there is the document at item 76 and 77, which is the Wal-Mart
acquisition committee document and then there is an annual report,
which is not really helpful and then an organogram. Well, that seems
to be the sum total of the so-called wealth of information, which our
learned friend Mr Unterhalter submitted has been put up by Wal-
20
Mart.
I’m told that just by way of correcting, the Commission’s
submission that 3.1 was in the record, that is incorrect. They indicated
that 3.1 of our request was covered by items 51 to 53 of the record
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and a perusal of that will indicate that those items don’t relate to 3.1.
Those are Massmart documents and not Wal-Mart documents.
Dealing then with the detailed submissions of the report, we
submit that it was entirely improper for our learned friends to come
and tell us this morning for the first time the difficulty they had in
relation to the list. You had indicated that they should set up the
reasons why they resisted. We pertinently said to them if you refuse
or decline to give any document, please tell us the reasons and had
they done so, we could have engaged more meaningfully with them
10
this morning. If, and we do not accept or suggest that that is the case,
if they had difficulty with certain documentation being overboard, we
would have engaged with them in limiting that, but to make up your
case as you go along in argument, for us to hear for the very first time
why you object to certain documents being put up, we submit, is
entirely unfair to this process. It doesn’t help us to engage
meaningfully with the difficulties that they have and therefore we are
stuck with these broad statements from the bar, the origins of which
we do not know, that there are tens of millions of documents and
there are pantechnicons. Well, we don’t know how our learned friend
20
knows that and if that is the case, if there is a logistical difficulty in
producing documents, put up an affidavit to tell us that.
We submit you will make an order in relation to the documents
that we are entitled to. If there is a logistical difficulty, it must be
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explained on oath as to exactly what the logical difficulty is. If a
document or information can’t be obtained, they must tell us what
efforts they’ve made to obtain the information, but these broad
statements from the bar that it’s impossible to comply and there are so
many documents really take the matter no further. It adds nothing to
the debate or to the issues.
But one would have thought that a company with ... I don’t
know how many million employees, 2.1 million I seem to remember,
employees and all of the resources at its disposal would quite easily
10
be able to access and obtain this information. After all, one reads
from information put up, and we’ll provide the details on the source,
but I have it as the Institute for World Economics and International
Management, which deals with the question of why did Wal-Mart fail
in Germany, it quotes from the claims made by Wal-Mart and it said
that the corporate superlatives, which Wal-Mart bandies about,
includes the following. Wal-Mart’s retail link system, the backbone of
its sophisticated inventory management and logistics infrastructure is
the biggest civilian database in the world, second only to the
Pentagon’s, but holding three times more data than the US Internal
20
Revenue Service. Now, we submit with claims like that it’s a
relatively easy matter to attend to a request for a few documents.
In relation to paragraph 5.1 of the request, if our learned friends
had difficulty with our use of the word “likely”, they are welcome to
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delete the word “likely”. So, they can then tell us their lowest
delivered prices. We don’t think that that’s something that should be
too much of a difficult exercise for them, because one of the
documents put up, no doubt more Wal-Mart corporate brag, is the cocalled global sourcing toolkit and as you will see, for example, at
page 2491 of the record, this deals with the ... it’s part of the toolkit
and it’s dealing with direct import opportunities toolkit overview and
this is the claim that they make. “[CONFIDENTIAL]”
10
ADV UNTERHALTER: Chair, there is some confidentiality that
attaches to the document. So, perhaps my learned friend could
exercise a little caution.
ADV BHANA: Yes, perhaps the room can be cleared. Perhaps I will
just give you...
ADV UNTERHALTER: You can look at the reference.
20
ADV BHANA: Yes, I think we’ll give you the reference and I will
just make the broad submission. Page 2491 makes the claim as to
what this document can do. 2493 indicates how you can compare top
items purchased by Newco companies versus Wal-Mart global
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procurement and very significantly in relation to South Africa at 2496
a certain claim is made. I won’t elaborate on it, because I’m told it
might be covered by confidentiality. A certain claim is made or a
certain aspect is dealt with in the due diligence report. Now, we don’t
have the due diligence report, but what 2496 appears to be is a single
page from the due diligence report and it indicates part of the WalMart Strategy insofar as import products and procurement goes and
what it will intend to achieve in relation to if it does the deal with
Massmart.
10
So, we submit that Wal-Mart itself has done the very exercise
that we are trying to do, even if it hasn’t done the exercise it has the
tools which enable it quite easily to supply the information, if you
will bear with me a moment, Chair. Oh yes, on the issue of the
definition in the document, if you will just bear with me for a
moment, our learned friend, as one would expect someone arguing his
case to do, has obviously tried to make it seem as difficult as possible
to deal with this request and as onerous as possible and to show how
complicated the request is, but the entire purpose of the definition that
we put in our request was to simplify the matter, not to complicate it,
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as he has suggested. All that we wanted to do was to exclude from
what was put up, agents that were acting as pure import agents and
which had been included in the merging parties’ definitions.
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So, when you have regard to that, this very complicated
definition that our learned friend tried to indicate it was and the great
difficulty that they had with it, is really no difficulty at all. All we are
saying is that don’t worry about the percentage of the component, just
exclude items that are purchased through local agents who import,
who act purely as import agents. We submit it’s easy enough to
separate those parties from local procurement. I’m told that one
simply looks at your supplier list and you can tell quite easily from
that who is purely an import agent for the supplies that you get.
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Chair, if you do have definition issue, we are sure you can
resolve those or you can direct that to us. If you do have aspects on
which you believe the documents may be overbroad, we submit they
are not, because they all go back to the statements. You will narrow
that. On that issue, by way of relevance, our learned friends tried to
somehow suggest that government has to demonstrate the relevance
of these documents. Well, we find that an astonishing submission
when almost all of these documents go back to what is said in witness
statements put up by the merging parties. So, if our learned friend
would be correct, it’s relevant to have the issue in their witness
20
statement, but when we seek to have the underlying data to test that,
somehow it becomes not relevant. It’s an approach which you will
reject entirely. Thank you, Chair.
CHAIRPERSON: We will endeavour to ... sorry.
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ADV UNTERHALTER: I don’t mean to interrupt. I just wanted to
make just one absolutely factual observation, which is that Mr Baker
in 2.2 refers to complaints, but that is just to give a summary of all the
complaints that are made. He doesn’t traverse labour issues at all. My
learned friend read from 2.2 of Mr Baker’s report where he seeks to
summarise what the complaints are about in the case, but he confines
himself to matters that have nothing to do with labour. So, the fact
that he records that there are complaints about labour matters, he
doesn’t traverse those at all. It’s just a factual inaccuracy on the part
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of my learned friend.
Chair, there are a couple of purely logistical questions, which
we wanted to raise, not bearing on the application at all, and if I could
just very briefly raise them, because this will be of some significance.
The first is that in respect of the timing of the two expert reports, as
matters stand at the moment, it’s on the 21st and I believe it will
probably be Mr Hodge, and the 28th for Mr Baker. The Easter
Weekend and its various public holidays is in the middle and that
could affect the ability to just get information from people. What we
would ask is either to advance by a few days Mr Hodge’s report or to
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allow Mr Baker a few extra days for the purposes of putting up his
report, just to allow for a bit of injury time over Easter. I’m told Mr
Baker’s request is he needs five clear working days and however that
can be achieved, given all these holidays, that’s what he says he needs
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to respond to the expert report of the department. So, either the one
comes forward or the other goes back, but whatever that is, either we
can try and agree or the Tribunal could perhaps just make a
determination, because that’s what would reasonably be required.
CHAIRPERSON: Why don’t you try and agree it?
ADV UNTERHALTER: Yes, absolutely.
CHAIRPERSON: If you can’t, we will then deal with it. Just let Ms
Badenhorst know this afternoon.
ADV UNTERHALTER: I’m sure we can do that. The second is that I
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believe that the unions were going to indicate by today whether Prof
Lichtenstein was going to give testimony or not and perhaps we could
ask our learned friend, Mr Kennedy, if he could give us that
indication.
ADV KENNEDY: Yes, as far as we are aware, he will be able to
make arrangements and we trust that that will be possible.
ADV UNTERHALTER: If that should not be the case, then perhaps
again we could ask our learned friends for the unions just to let us
know timeously. Then just to indicate, our witness, Debra Layten, has
difficulties in the dates that have now been specified. We may have to
20
seek a substitute, if she can’t rearrange her schedule, just to give
notice that that may have to happen, but the contents of what is said
there will not change.
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CHAIRPERSON: So, the substitute is a Chilean, in other words, I
suppose it’s somebody who speaks to the issues in Chile.
ADV UNTERHALTER: Yes, and if the person that we can find, if
there is some issue that they can’t talk to, then we will obviously
indicate what that difference is.
CHAIRPERSON: We’ll try and give an order as soon as possible, to
keep the timetable at bay. I mean, we can try this afternoon. I will see
if my two colleagues’ energy levels are alright at this stage, but we
will try and...
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ADV UNTERHALTER: Chair, just as to if there are any documents
to be produced, then I don’t know that the question of regulating time
for production, but obviously it depends a good deal on where the
Tribunal comes down as to what times might be necessary for
production, but perhaps that is a matter that can be left over once the
order is rendered.
CHAIRPERSON: I can’t remember whether we gave that in our
timetable originally.
ADV UNTERHALTER: Perhaps I can ask someone who was there at
the time to...
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ADV WILSON: Chair, as I recall the discussion on Tuesday, I made
to the commission that the time that will be necessary for production
would depend in large part on the scope. So, we left open the question
of that for determination later.
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ADV BHANA: Chair, I don’t think that’s entirely correct. Our
learned friend did indicate that there could theoretically be some
difficulty. What was agreed was that it would be the 1st of April and if
they had difficulty, they would indicate that. I think you used the
words we’ll take that as a provisional date.
CHAIRPERSON: Thank you very much. We will see you on the 9 th
of May.
ADJOURNMENT
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I, the undersigned, hereby declare that this document is a true and
just transcription, in as far as it is audible, of the mechanically
recorded proceedings in the matter of:
Competition Tribunal of South Africa
Wal-Mart Stores/Massmart Holdings – 25 March 2011
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Date: 25 March 2011
Transcriptionists: M Van-Der-Ben
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I, the undersigned, hereby declare that this document is a true
reflection, in as far as it is audible, of the mechanically recorded
proceedings in the matter of:
Competition Tribunal of South Africa
Wal-Mart Stores/Massmart Holdings – 25 March 2011
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Editor: P J Van-Der-Ben
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Date: 25 March 2011