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 \ AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park 0035 Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 41 Wal-Mart Stores and Massmart Holdings 25 March 2011 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 10 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”. 20 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 AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 42 Wal-Mart Stores and Massmart Holdings 25 March 2011 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 10 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 20 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. AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 43 Wal-Mart Stores and Massmart Holdings 25 March 2011 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 10 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 20 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 AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 44 Wal-Mart Stores and Massmart Holdings 25 March 2011 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 10 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 20 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. AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 45 Wal-Mart Stores and Massmart Holdings 25 March 2011 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 10 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 20 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. AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 46 Wal-Mart Stores and Massmart Holdings 25 March 2011 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 10 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 20 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 AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 47 Wal-Mart Stores and Massmart Holdings 25 March 2011 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 10 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 20 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 AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 48 Wal-Mart Stores and Massmart Holdings 25 March 2011 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, 10 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 20 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, AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 49 Wal-Mart Stores and Massmart Holdings 25 March 2011 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 10 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. 20 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. AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 50 Wal-Mart Stores and Massmart Holdings 25 March 2011 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 10 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 20 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 AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 51 Wal-Mart Stores and Massmart Holdings 25 March 2011 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 10 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. 20 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 AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 52 Wal-Mart Stores and Massmart Holdings 25 March 2011 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 10 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 20 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. AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 53 Wal-Mart Stores and Massmart Holdings 25 March 2011 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 10 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 20 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. AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 54 Wal-Mart Stores and Massmart Holdings 25 March 2011 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 10 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 20 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 AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 55 Wal-Mart Stores and Massmart Holdings 25 March 2011 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 10 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, 20 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 AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 56 Wal-Mart Stores and Massmart Holdings 25 March 2011 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 10 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 20 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 AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 57 Wal-Mart Stores and Massmart Holdings 25 March 2011 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 10 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 20 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. AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 58 Wal-Mart Stores and Massmart Holdings 25 March 2011 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 10 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 AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 59 Wal-Mart Stores and Massmart Holdings 25 March 2011 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 AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 60 Wal-Mart Stores and Massmart Holdings 25 March 2011 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 AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 61 Wal-Mart Stores and Massmart Holdings 25 March 2011 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 AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 62 Wal-Mart Stores and Massmart Holdings 25 March 2011 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 AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 63 Wal-Mart Stores and Massmart Holdings 25 March 2011 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 AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 64 Wal-Mart Stores and Massmart Holdings 25 March 2011 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 AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 65 Wal-Mart Stores and Massmart Holdings 25 March 2011 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. AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 66 Wal-Mart Stores and Massmart Holdings 25 March 2011 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 AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 67 Wal-Mart Stores and Massmart Holdings 25 March 2011 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 20 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 AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 68 Wal-Mart Stores and Massmart Holdings 25 March 2011 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 AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 69 Wal-Mart Stores and Massmart Holdings 25 March 2011 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 AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 70 Wal-Mart Stores and Massmart Holdings 25 March 2011 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. AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 71 Wal-Mart Stores and Massmart Holdings 25 March 2011 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 20 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 AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 72 Wal-Mart Stores and Massmart Holdings 25 March 2011 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 AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 73 Wal-Mart Stores and Massmart Holdings 25 March 2011 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 AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 74 Wal-Mart Stores and Massmart Holdings 25 March 2011 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 AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 75 Wal-Mart Stores and Massmart Holdings 25 March 2011 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 AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 76 Wal-Mart Stores and Massmart Holdings 25 March 2011 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 AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 77 Wal-Mart Stores and Massmart Holdings 25 March 2011 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. 10 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 AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 78 Wal-Mart Stores and Massmart Holdings 25 March 2011 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 10 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 20 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.” AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 79 Wal-Mart Stores and Massmart Holdings 25 March 2011 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. 20 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 AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 80 Wal-Mart Stores and Massmart Holdings 25 March 2011 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 10 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, 20 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 AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 81 Wal-Mart Stores and Massmart Holdings 25 March 2011 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 10 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 20 On resumption: ADV UNTERHALTER: ...the detail of what here has been sought, obviously understood in the light of our submissions and the AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 82 Wal-Mart Stores and Massmart Holdings 25 March 2011 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 10 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 20 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 AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 83 Wal-Mart Stores and Massmart Holdings 25 March 2011 “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 10 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. 20 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 AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 84 Wal-Mart Stores and Massmart Holdings 25 March 2011 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 10 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 20 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. AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 85 Wal-Mart Stores and Massmart Holdings 25 March 2011 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 10 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 20 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 AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 86 Wal-Mart Stores and Massmart Holdings 25 March 2011 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 10 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 20 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? AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 87 Wal-Mart Stores and Massmart Holdings 25 March 2011 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 20 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. AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 88 Wal-Mart Stores and Massmart Holdings 25 March 2011 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 10 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 AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 89 Wal-Mart Stores and Massmart Holdings 25 March 2011 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 10 “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 20 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 AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 90 Wal-Mart Stores and Massmart Holdings 25 March 2011 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 10 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 20 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 AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 91 Wal-Mart Stores and Massmart Holdings 25 March 2011 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. 10 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 20 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. AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 92 Wal-Mart Stores and Massmart Holdings 25 March 2011 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 10 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 20 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? AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 93 Wal-Mart Stores and Massmart Holdings 25 March 2011 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. 10 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 20 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 AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 94 Wal-Mart Stores and Massmart Holdings 25 March 2011 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 10 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. 20 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 AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 95 Wal-Mart Stores and Massmart Holdings 25 March 2011 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 10 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 AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 96 Wal-Mart Stores and Massmart Holdings 25 March 2011 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 AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 97 Wal-Mart Stores and Massmart Holdings 25 March 2011 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 10 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 AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 98 Wal-Mart Stores and Massmart Holdings 25 March 2011 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 10 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 20 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 AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 99 Wal-Mart Stores and Massmart Holdings 25 March 2011 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 10 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 AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 100 Wal-Mart Stores and Massmart Holdings 25 March 2011 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. AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 101 Wal-Mart Stores and Massmart Holdings 25 March 2011 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 10 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 AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 102 Wal-Mart Stores and Massmart Holdings 25 March 2011 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. 20 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 AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 103 Wal-Mart Stores and Massmart Holdings 25 March 2011 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 10 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? AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 104 Wal-Mart Stores and Massmart Holdings 25 March 2011 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. AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 105 Wal-Mart Stores and Massmart Holdings 25 March 2011 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 20 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 AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 106 Wal-Mart Stores and Massmart Holdings 25 March 2011 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 10 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. AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 107 Wal-Mart Stores and Massmart Holdings 25 March 2011 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 AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 108 Wal-Mart Stores and Massmart Holdings 25 March 2011 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 AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 109 Wal-Mart Stores and Massmart Holdings 25 March 2011 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 AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 110 Wal-Mart Stores and Massmart Holdings 25 March 2011 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. AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 111 Wal-Mart Stores and Massmart Holdings 25 March 2011 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, AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 112 Wal-Mart Stores and Massmart Holdings 25 March 2011 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 AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 113 Wal-Mart Stores and Massmart Holdings 25 March 2011 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 AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 114 Wal-Mart Stores and Massmart Holdings 25 March 2011 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. 20 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 AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 115 Wal-Mart Stores and Massmart Holdings 25 March 2011 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. 20 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. AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 116 Wal-Mart Stores and Massmart Holdings 25 March 2011 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 20 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 AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 117 Wal-Mart Stores and Massmart Holdings 25 March 2011 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 20 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. AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 118 Wal-Mart Stores and Massmart Holdings 25 March 2011 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, AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 119 Wal-Mart Stores and Massmart Holdings 25 March 2011 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 20 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 AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 120 Wal-Mart Stores and Massmart Holdings 25 March 2011 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 20 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 AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 121 Wal-Mart Stores and Massmart Holdings 25 March 2011 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. AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 122 Wal-Mart Stores and Massmart Holdings 25 March 2011 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 10 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 20 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 AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 123 Wal-Mart Stores and Massmart Holdings 25 March 2011 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 20 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. AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 124 Wal-Mart Stores and Massmart Holdings 25 March 2011 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 AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 125 Wal-Mart Stores and Massmart Holdings 25 March 2011 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 AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 126 Wal-Mart Stores and Massmart Holdings 25 March 2011 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 AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 127 Wal-Mart Stores and Massmart Holdings 25 March 2011 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 AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 128 Wal-Mart Stores and Massmart Holdings 25 March 2011 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 AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 129 Wal-Mart Stores and Massmart Holdings 25 March 2011 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 AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 130 Wal-Mart Stores and Massmart Holdings 25 March 2011 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 AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 131 Wal-Mart Stores and Massmart Holdings 25 March 2011 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, 20 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. AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 132 Wal-Mart Stores and Massmart Holdings 25 March 2011 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. 10 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. AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 133 Wal-Mart Stores and Massmart Holdings 25 March 2011 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 10 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 20 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 AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 134 Wal-Mart Stores and Massmart Holdings 25 March 2011 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 10 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. AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 135 Wal-Mart Stores and Massmart Holdings 25 March 2011 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... 10 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... 20 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. AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Competition Tribunal Case No. 73/LM/Nov10 Page 136 Wal-Mart Stores and Massmart Holdings 25 March 2011 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 10 AMB Recordings and Transcriptions CC P O Box 326, Derdepoort Park. 0035 – Tel: (012) 819 1013/5; Fax: (012) 349 8218 Transcriber’s Certificate 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 .................................................... Date: 25 March 2011 Transcriptionists: M Van-Der-Ben A Van-Der-Ben Editor’s Certificate 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 .................................................... Editor: P J Van-Der-Ben AMB Recordings and Transcriptions CC P O Box 326 Derdepoort Park 0035 Date: 25 March 2011