Expert analysis on impact of Walmart-Massmart merger
Genesis was appointed to provide expert analysis on Walmart’s proposed acquisition of Massmart by affected trade unions, which were later joined by the Department of Economic Development. This was considered a seminal case regarding public interest issues related to mergers and acquisitions in South Africa.
The central issues at stake were whether the acquisition would result in a loss of employment, or reduction in the conditions of employment, and an increase in global sourcing at the expense of domestic industry. Genesis was brought in to provide expert analysis of these issues by the trade unions, later joined by the Department of Economic Development.
The particular challenge in this case was not only to determine if such effects were likely on the economic and documentary evidence, but also if likely, what the quantum of effect would be. Genesis was able to meet this challenge through the careful extraction of key information from the vast discovery and the application of a variety of economic tools drawn from international trade theory, labour economics and input-output analysis.
This evidence was central to the Competition Tribunal adopting a condition that Walmart put in place a supplier development fund, and the Competition Appeal Court singling out Genesis as fulfilling the expert role in these kinds of proceedings in an exemplary fashion.
When the Competition Appeal Court later decided to refer the matter of the size and structure of the supplier development fund to a group of experts, Genesis was once more involved in developing submissions, which were co-authored by Nobel laureate, Joseph Stiglitz. This process ultimately resulted in the total funds dedicated to a supplier development fund being raised from R100 million to R200 million. At the conclusion of the proceedings, the Appeal Court singled out the Genesis team for fulfilling its expert role in the proceedings in an exemplary fashion
The Walmart case not only shaped the legal view of public interest in merger control, but the contribution made by Genesis demonstrated that economists are able to bring useful tools to bear in matters such as these. Using these tools, they are able to accurately quantify and measure the effects on public interest variables and, in doing so, to greatly improve legal decision-making on otherwise vague concepts.