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					    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

                 10 May 2011



       Panel:                   N Manoim
\                               Y Carrim
                                A Wessels

       Case Manager:            K Moodlaiyar




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     CHAIRPERSON: Good morning. Mr Pattison, I think before we do
     re-examination, there are a couple of questions that we would like to
     put to you, if we could start with that. What I would like to do is to
     discuss with you a response to conditions. The reason I’m doing so is
     that it’s not to make the assumption that we think conditions are
     necessary, but just because we won’t have an opportunity to deal with
     you again, should we have to have public interest considerations at
     the end of the day and those concerns arise, what I’m exploring is
     whether there are possible conditions and as you are the only
10   operational witness in a sense who knows the business from an
     operational side, to get your response as to whether they are practical
     or doable or not.
           So, please don’t make the assumption that we are necessarily
     going to make those findings. I’m just exploring that, if that’s a
     possibility. I just want to start off firstly with concerns over
     employment. The first one I wanted to discuss with you is that if there
     is a concern that collective bargaining rights that are enjoyed
     currently by unions within the Massmart Group might diminished,
     what your response would be to a condition that would require that
20   there be no diminution of collective bargaining rights as they are
     currently enjoyed in the group? Would that create any problems?




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     MR PATTISON: Well, what I can say that is perhaps helpful is that
     it’s certainly not our intention to reduce those rights. So, in that
     respect I suppose I can’t argue with that.
     CHAIRPERSON: Thanks. The second is in relation to people who
     had been retrenched and there is the debate that you had yesterday
     with the union representatives about Nelspruit. Assuming that we
     can’t at the end of the day be absolutely certain as to whether those
     retrenchments were in anticipation of the merger or, from your point
     of view, whether they were driven by operational requirements
10   relevant at the time. Would there be any objection to, as it were, a
     requirement that if they vacancies arose in the group as a whole and
     not necessarily just a particular division, that those particular workers
     who had been retrenched might be identified and given a priority in
     new opportunities that come the way of the merged firm?
     MR PATTISON: Overall in principle I think we probably have that
     agreement already with the union. The sticking points around that
     agreement were on what terms and conditions. Now, perhaps you
     would have picked up yesterday a fundamental dispute we have with
     the union is given we have four recognition agreements, the terms and
20   conditions of employment changed throughout the company.
           So, the other posing part of the negotiation would be that they
     would have stand down from their demand that the person is
     reinstated. Certainly we are happy to explore with the union re-


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     employment with some preference, but I’m afraid it would have to be
     at the pay scales of those particular jobs. It would have to be on the
     terms and conditions of that division. However, I would certainly be
     happy to make a concession, if I’m allowed to, that their length of
     service would be recognised.
     CHAIRPERSON: If I can move on to the area of the effect on local
     manufacturing and listening to some of the issues that you’ve raised
     yesterday and also in the witness statements of some of the
     difficulties there, and we obviously recognise that there are a number
10   of conceptual difficulties here, but let me put a sort of rather broad
     proposition to you, just to response in a sense to certain possible
     principles and perhaps ways of dealing with this.
           Assuming firstly that a condition was of limited duration, in
     other words, it didn’t apply permanently to the group, but it applied
     for a period of certain years post the merger. Secondly, and let’s use 5
     years as a possible time period, secondly that the level of purchases
     would be assessed on what they are currently. In other words, to meet
     the criticism that one is imposing on the merged firm, obligations that
     go beyond what Massmart is currently doing, so let us assume that
20   Massmart is a competitive firm at the moment and it is competing at a
     level locally with what can be assumed competitive.
           Using that as proxy and here we are open about whether that
     should be at the level of the percentage of the total turnover or a rand


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     value, one would find a proxy period to measure that. Let’s assume
     that one took 2010 as the proxy year and said, look, over a period of 3
     months you were to approach all your suppliers and saying what is
     the local manufacturing rand value over these, let’s say 3 months,
     your month in which you have your largest purchases, your lowest
     purchases and perhaps some middle month. You would be in the best
     position to respond to that.
           So, over 3 months you say to these suppliers give us
     information as to what your local manufacturing content is and to the
10   extent that some of it has been bought, say we paid X rand to get this
     thing, how much was local purchasing and how much did you buy in
     to meet the suggestion that some people like Tiger might at a
     particular stage have bought wheat from overseas but then processed
     it to a certain extent. In other words, fill that in, give us that
     information and say to them it’s going to be subject to a possible
     audit and that you are giving it in terms of the Competition Act and
     that you have an obligation to give correct information and giving
     false information to the Commission on the Act is an offence.
           Suppliers are then obligated to give you that information. It’s
20   not your problem to verify it. Auditors will be appointed to do a
     random audit, but you are entitled to take that information as it is. It is
     then deemed to be the local content that that supplier is giving you
     going forward over the period of that. So, to the extent that you


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     continue to use that supplier, that will be deemed to be their local
     content, even though it may change from time-to-time. One could
     then say to a supplier if you increase your local content from what it
     was, you can advise the Massmart Grouping and they will then be
     able to record that figure increased.
           So, in other words, if Tiger, again using them as an example,
     were only giving you X million rand at the time that we have the
     proxy year. They’ve now gone up and increased that. They can alert
     you to that so it’s an incentive to buy from them and an incentive for
10   them to sell to you. What the obligation would be is to hold to either
     the rand value or the percentage. One is going to have to consider
     which is the more appropriate figure, as it was in the proxy year. So,
     in other words, you are not being obliged to increase what you had at
     the particular proxy year, which I think was one of your concerns and
     obviously as you are expanding, so the obligation would become less
     ... in your turnover the obligation is less burdensome.
           But at the same time in order to protect the industries that have
     been considered most vulnerable – that is food and clothing – there
     would be an incentive for you to, if you were to increase your current
20   turnovers, if we understand what you said yesterday, it would be
     relatively low in comparison to rival grouping. If you were to increase
     them by some multiple over the period, you would in a sense get a
     holiday overall. So, in other words, to give an example, if the period


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     was to be 5 years that you would be held to this particular percentage
     or value, as it was in 2010, if you were to exceed your targets in food
     and clothing, just giving those as an example, because those are the
     ones who had come up in the debate, by a certain multiple, the period
     subject to these conditions would be shortened.
           So, let’s assume that you achieved the target and multiplying in
     clothing and food by a certain multiple in 3 years, the conditions
     would end over 3 years and would not end over 5 years. So, it’s a bit
     rough and ready and I know I’m sort of throwing you into it, but
10   would you give us your first response to that possibility?
     MR PATTISON: Yes Chairman, and within the spirit in which it’s
     asked, but if you wouldn’t mind just me placing it for the record, so
     we clearly the condition is not necessary. My overall summation,
     giving it some thought and in hours of debate with various people is
     that it’s an impossible condition to approve and it would increase the
     risks in Massmart greatly, but nevertheless, let me explore some of
     the issues you’ve talked about.
           I think the problem with it needs to be done in a few bundles.
     First of all, it’s about its practicality. So, as I listened to you, my
20   thoughts are dominated by the level of bureaucracy you are going to
     unleash. We are talking about 4 500 suppliers, 120 000 products. Our
     systems are not designed in such a way that we could even track
     anything like that. So, these certificates that you talk about there are


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     going to have to be 120 000 of them, because we have to track it at an
     item level and therefore each item will even have to have a
     percentage of local procurement, because it’s not either locally or not.
     There is a local content amount to it. So, practically we have no way
     of tracking it.
            So, three months, it won’t ... and by the way, I don’t think the
     suppliers even track it. You know, I’ve had this conversation with
     Hennie and asked do you actually know your input to your own
     manufacturing process, where that stuff comes from and they say, no
10   well, I buy it from another wholesaler. Now you would have to go
     back to that wholesaler and find out, well, where did you get it from?
     So, we have that whole ... and it really is the most unbelievable
     bureaucracy that will be unleashed and I must tell you just honestly I
     can’t see any way of us administrating it. It really is massive. So, I
     don’t want to explore that at length. I can, but I think you get my
     impression that it’s unfortunately a massive bureaucracy.
            The second point I would like to make is although I must say I
     understand that perhaps sitting outside the industry that looks quite
     reasonable, we as a retailer only can buy from suppliers that which
20   customers buy from us. So, it is possible to be persuaded from a
     single factory to buy the first less of stock, ten per store and put it on
     the shelf. If that product is not priced and attractive to consumers, it
     just sits there. In fact, now I have to write it off. I don’t even just


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     make the loss. I don’t not make the profit. I not only don’t make the
     profit. I have to write off the product. Also, I’m not able to put in
     another order to the factor, because I never sold the first one.
            So, essentially what you would have to do is not only invoke
     the bureaucracy of our suppliers and their suppliers and their
     suppliers. You must at the same time place a condition upon all
     consumers to buy the goods from us. You would have to get them
     involved as well, because we can’t make things sell. We just buy
     them and put them on the shelf. Customers choose and let’s say in an
10   extreme example just so that we can explore it, let’s say it’s a product
     that its only problem is that it’s too expensive and let’s say it’s 10%
     more expensive.
            Now, that customer can first of all come into our store, look at
     that product on our shelves. We would have also imported the product
     and so the consumer will choose. Even if we were crazy enough, if I
     may use that word, to not import the product that we should have
     been selling, our competitors would have imported it and the
     customers are going to go there and not with us. So, you would have
     to at the same time bind customers on that. I can go and explore that
20   in greater detail.
            There is another whole area, which is I think you would mess
     with the fundamental competitive framework, and let me explain that.
     There are many natural tensions in a business, in commerce that are


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     very important and one of the natural tensions is for us to have a
     discussion with the supplier about what and how much product they
     sell us and at which price. There needs to be a tension that if you
     don’t meet our requirements, I will get it somewhere else. What you
     will effectively do in a whole bunch of industries, because
     unfortunately South Africa has a predominance of large concentrated
     supplier markets, as I think this Tribunal is aware, that we will in
     many instances be negotiating with one supplier who will now know
     that we can only buy their product and then on what basis do we
10   negotiate with them for price?
           So, I think you mess up the framework. So, I would label that
     as a highly anticompetitive approach, because we would no longer be
     able to bargain now with our suppliers. I can explore it for longer, but
     I think on free material issues I would hope to convince you that it’s
     not a practical, necessary or competitive supporting type of condition.
     CHAIRPERSON: But let me make one thing clear, because perhaps it
     wasn’t clear in what I said. One wouldn’t oblige you per sector to
     purchase the same amount. In other words, the supplier might know
     that you are under your previous local content obligation for a certain
20   period of time, but they can’t be certain that you are going to
     necessarily buy from them and you might find the local supplier in
     another sector. So, in a sense their bargaining position is not ... they
     are not guaranteed that you have to buy from them, because you can


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     move across sectors. In other words, the obligation is to buy either the
     same percentage or the same rand value as it was in 2010, but it
     doesn’t oblige you to buy from that particular sector.
           So, assuming a lawnmower manufacturer in South Africa said
     we are upping our price and you’ve got to guy from that, well, you
     can say we are not obliged to buy from you. We can find content
     somewhere else. We can find it wine. We can find it in agriculture.
     We can find it in clothing.
     MR PATTISON: I do understand that. So, what you are saying is
10   there is some sort of, I can take from Peter to pay Paul. While you
     were talking, it enabled me to think of a fourth category of reason
     why I won’t do it, thank you for that, giving me another opportunity.
     Another problem is we can’t tell what is going to happen next week,
     next month and next year and the point I’m made to the various
     government departments when I have been allowed to talk to them
     and the unions is it is in fact their behaviour that is going to
     fundamentally change the competiveness of the industry.
           So, tomorrow the Department of Trade and Industry or the
     Department of Finance, I’m not sure who is responsible for it, may
20   come to some trade agreement with someone, which fundamentally
     alters the fabric of competitiveness. The Reserve Bank and the
     Department of Finance may choose to take some different view on
     interest rates and exchange rates. The whole market changes. The


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     rand changes from 7 to 10. I am now going to be sitting either
     explaining to you or explaining to the suppliers or them explaining to
     me sorry, we can’t meet those conditions, because the thing is shifting
     anyway.
           Let me say on behalf of the unions, and we have this particular
     problem in clothing at the moment, is SACTWU are busy demanding,
     I think it is 17 or 20% wage increases and shutting down factors,
     because they are not complying with basic agreements. I have no
     objection to that. I think that’s their right, but now I’m not going to be
10   able to buy from them because of their behaviour.
           So, I must say I think it messes with the fabric of the
     commercial nature of society. Unions will now believe that they can
     ask for higher wage increases, because those suppliers are going to be
     ... because we are going to be forced to supply from Massmart and we
     are going to break down their national tension. So, I think you
     unleash this into the market and we are going to be sitting around for
     three years, five years or whatever the number that is essentially
     being uncompetitive.
           Let me go further as it occur to me, is it also sends to me a
20   signal that you would be prioritising the worth of a manufacturing job
     over the worth of a Massmart employee’s job, because in this
     scenario we may find us uncompetitive in areas and we may ourselves
     be forced to shut down productive capacity, our own productive


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     capacity. How would we now compare the tension between the worth
     of a Massmart job and the worth of a manufacturer’s job,
     remembering all of that when I believe there is going to be threat
     caused by us to the manufacturing jobs? So, it would be a very
     difficult pill to swallow.
     CHAIRPERSON: What I have difficulty is with your last answer,
     because if your current level of procurement, and that’s what you are
     going to held to for this period, let’s assume it’s held at a rand value
     with some inflation re-indexed over the period, we can assume that
10   your current level of procurement is a competitive one. You are not
     subsidising the local industry I assume at the moment.
     MR PATTISON: Not at all.
     CHAIRPERSON: And you’ve also said don’t worry, there is going to
     be no major effect on local procurement.
     MR PATTISON: Created by us. There may be an effect on local
     procurement, but it’s not going to be created by us.
     CHAIRPERSON: It’s not going to be created by you, but in a sense
     I’ve also understood you saying that your local procurement patterns
     are not likely to change post-merger.
20   MR PATTISON: Not caused by the merger. I’m always very specific,
     caused by the merger. I mean, for example, if there was flooding
     again in the Orange River as we had this year and we destroyed the
     citrus crop, it is now imported. I can’t buy it locally.


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     CHAIRPERSON: Okay, well short of an act of God or an act of...
     MR PATTISON: Government or the union.
     CHAIRPERSON: I’m not sure which has priority in that order, but...
     MR PATTISON: Mr Chairman, if I can share with you, when I’ve
     had discussions with this, I’ve always said if everyone else is
     prepared to sign up to it, governments, unions, we can try God, then
     I’m in, but as I say, I think even one of the Ministers was quoted; this
     is business, unions and government working together. I don’t think
     you can hold this particular party responsible.
10   CHAIRPERSON: Okay, you know, we hear your responses and all
     that.
     MR PATTISON: Thank you, I appreciate that.
     CHAIRPERSON: Let me rather then move away from the conditions
     to another conceptual issue. Assuming that we find at the end of the
     hearing that there are problems around effects on local manufacturers,
     in other words, a public interest is identified and we are concerned
     about it. If we can find no solutions to that problem and no remedy,
     what are we then to do? I mean, it will presumably be argued by
     opponents to this merger well, if there is no viable remedy, you the
20   Tribunal must prohibit it.
     MR PATTISON: Yes, I don’t think there is nothing that can be done
     about it at all, and again, I’ve suggested in my various discussions
     with the parties that if it is government’s view that the local


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     manufacturing is under pressure, it can put in industrial policy, trade
     policy and other measures to protect local manufacturing. As I say, I
     don’t think the major threat to local manufacturing is the Wal-Mart
     acquisition of Massmart. I’m not saying, however, there are not lots
     of threats caused by imports potentially. I mean, there are also lots of
     advantages caused by imports.
           So, I personally think it’s up to government to manage this
     industry level, not merger-specific company level. So, I’m saying that
     I think there are remedies for manufacturers to go and approach
10   government, put incentives in place, finance in place, support in
     place, protective trade barriers in place, other measures that I know
     they’ve been doing anyway and they can continue to do that.
     CHAIRPERSON: I think what I’m asking is assuming we find
     merger-specific harm caused by the merger, so take that assumption,
     what we then have to do is to look at to whether there is a remedy that
     can deal with that short of prohibition. So, what I’m asking you is that
     you’ve raised certain practical problems around remedies that have
     been considered. Is there no other remedy that is within our
     jurisdiction that can deal with this problem, assuming it is identified?
20   MR PATTISON: I really have given, Chair, this some thought and I
     must say I struggle to find one.
     CHAIRPERSON: Thanks Mr Gauntlett?




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     ADV GAUNTLETT: Mr Pattison, our colleagues for the unions have
     probed your evidence in a number of respects going to these two main
     areas of interest of effect on employment and effect on procurement.
     Our learned friend for the Minister has very directly suggested that
     you’ve been untruthful and that your evidence lacks credibility. He
     says that you’ve pulled successively, if not successfully, the the wool
     over the eyes in his phrase over first the Department, the Commission
     and now you seek to do so as regards the Tribunal. Can we just deal
     with that aspect first?
10         Firstly, it is suggested that you as a shareholder in the target
     company have a personal interest in the merger succeeding. Do you
     dispute that?
     MR PATTISON: I dispute it from the fact that it may be implied that
     if the deal doesn’t go ahead, I will be somehow financially
     prejudiced. That is not the case. As I tried to indicate, I own the
     shares regardless. I was not given the shares or options on any
     performance factor related to the transaction. There are scenarios in
     which, if the deal falls away, that I would make more money should I
     hold onto the shares. So, it is true that when the transaction goes
20   through I make a suggested considerable sum of money. However,
     the amount of money I make is not dependent upon the deal. So, in
     that respect I completely dispute it.




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     ADV GAUNTLETT: Thank you. Secondly it is suggested you
     deliberately misled the ministry and successively the Commission and
     the Tribunal in your response to Prof Levine’s letter to an exact
     parsing of which you were taken. Did you receive a single query from
     Prof Levine or anybody else in the Department arising from the
     response you had given to the letter?
     MR PATTISON: No, the responses to the letter have not had a single
     question, other than in February further information was requested,
     which was not new information. It was a set of data, which we put
10   together that needed to be rearranged. So, other than the follow-up we
     had, I think it was February, no specific questions were put to me on
     those responses.
     ADV GAUNTLETT: Yes. Now, as regards clothing and textiles, the
     market share of Massmart you indicated was – the figure is before the
     Tribunal – by common cause is minute. Is that right?
     MR PATTISON: Correct.
     ADV GAUNTLETT: What is your prognosis as to the effect of the
     merger as regards market growth in terms of clothing and textiles?
     MR PATTISON: You know, given our turnover in clothing is so low,
20   we may see 20, 30, 40, 50% and let me exaggerate, even 100%
     growth in our clothing business. That would still be a minute
     contribution in the clothing sector.




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     ADV GAUNTLETT: I will come back to the question of procurement
     in a moment, but could we first deal with the question of labour and
     the Nelspruit retrenchments. Mr Pattison, the account that you’ve
     given in your witness statement as to the factual background to the
     Nelspruit retrenchments and particularly paragraph 7.8 through to
     7.11 of your witness statements, the factual content of that hasn’t
     been challenged. So, I won’t deal with that.
           What has been put to you, however, as I understand it, is that
     you were a bride and embarking, it seems, on some sort of adventure
10   into anorexia that you wanted to make yourself more attractive and
     this was the way to go. Could we deal with that proposition? First of
     all, would you tell the Chair what was the proportion of the 503
     affected workforce to your overall workforce at the time?
     MR PATTISON: Our workforce, I think we’ve last reported at about
     30 000 full time equivalence and so that would be 500 to 30 000. My
     maths is not good enough to give you an exact percentage.
     CHAIRPERSON: Just follow up there, what percentage would it have
     been of Game Nelspruit?
     MR PATTISON: I would imagine given that, and again Chair if I’m
20   allowed to guess a bit, we went from two stores to one. So, I would
     guess that in Nelspruit we’ve halved the number of staff. I suspect it’s
     less than that, because the store we went into was bigger, but I think
     probably half is a good number in Nelspruit, and that’s not 503. That


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     would have been some portion of the 503, maybe 60 staff. So, the
     retrenchment was not just about Nelspruit. The retrenchment was
     about the regional distribution centres and Nelspruit. Perhaps Chair it
     is useful to note the reason we went from two stores to one in
     Nelspruit is because one of the landlords, Old Mutual, cancelled our
     lease.
     ADV GAUNTLETT: Yes, the details in that regard are set out in
     paragraph 783 I think of your statement and it hasn’t been challenged,
     but may I ask you this? When was the decision taken which set in
10   train the retrenchments, the logistical decision which gave rise to the
     restructuring which you describe here?
     MR PATTISON: Well, if you are talking the strategic, I will have to
     separate between the strategic and the realisation that we needed to
     retrench.
     ADV GAUNTLETT: Yes.
     MR PATTISON: The strategic decision to convert our business from
     a direct to store delivery model to a regional distribution model was
     probably first taken in 2002/2003. It had fits and starts. It really got
     under way probably in 2006 or 2007. The realisation that we had to
20   retrench, of course, only became obvious in late 2009 and as soon as
     we were sure of that, we started consulting with the unions.




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     ADV GAUNTLETT: Yes. The initial distribution centre model, you
     say you decided upon as far back as 2002. As regards the particular
     distribution centres, which are identified in your statement?
     MR PATTISON: Are you referring to the Cape Town or the
     Johannesburg regional distribution centre?
     ADV GAUNTLETT: The ones that you indentify in paragraph 782 of
     your statement.
     MR PATTISON: I can’t remember exactly, but I would imagine for
     us to have opened it in 2009, I think it was 2010 we opened it.
10   ADV GAUNTLETT: Yes.
     MR PATTISON: I think we started up in 2009, we probably started
     building in 2008 and so we would probably have to reach agreement
     on that site in 2007, somewhere around there.
     ADV GAUNTLETT: Now the suggestion has been that you were on
     a shortlist of brides by early or mid, I think it was 2009 and you’ve
     described the whole process under Mr Kennedy’s questioning how
     reached that critical negotiation in London round about, I think 24, 25
     September and there was the … that intensive weekend in the letter,
     you recall?
20   MR PATTISON: I recall.
     ADV GAUNTLETT: Now given the timing in relation to the
     retrenchments, which is set out February to June 2010 in your witness
     statement, what is your understanding of how attractive it would be


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     particularly to Wal-Mart to be moving towards a merger in the same
     timeframe as in the South African highly regulated legal environment
     contested retrenchment? How do you see that as being any adornment
     to the bride?
     MR PATTISON: I would see it as a negative and certainly at the time
     where I was having to consider these recommendations by the
     management of Mass Discounters, I did realise that you know, there
     may have been negative impressions created in Massmart by us
     retrenching.
10   ADV GAUNTLETT: Yes, and you were taxed about a board minute
     at page 1149 of the record where there is a remark by one of those
     present, Mr Ramiah, R-A-M-I-A-H for the record, at the board
     meeting of 2 February 2010 and at 1149 you will remember there was
     that line “I will discuss the potential” … first of all, you had raised
     for … no, Mr Haywood had raised, he’s the CFO, he’d raised “are
     you going to speak to the other divisions of Massmart to assist in
     possibly taking on the retrenched staff” you remember? And the
     answer is by Mr Ramiah, “I will discuss the potential at other
     Massmart chains picking up on the affected staff with HR forum, but
20   potentially a huge risk due to group or centralised negotiations.”
     How do you understand that?
     MR PATTISON: This has been a long running discussions with the
     unions, is when we try and use one division to help another division,


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     re-employ perhaps staff retrenched, it can cause a problem in the
     unions, because they then want to discuss about that all terms and
     conditions in the group must be same, which is impractical as far as
     we are concerned. And so whilst … what you heard there was an
     expression of an intent to wish to help, someone identifying that this
     could … would likely run into the unions being unhappy that a
     retrenched staff was picked up in a different division under different
     terms and conditions.
     ADV GAUNTLETT: Yes. Now the cross-examiner stopped there. If
10   one goes to the next board meeting, Mr Harrison, which is on the 3rd
     of May 2010 at 1152 of the record, on reads this, this is Mr Ramiah
     and I’ll ask your comment on this “RR gave an update on the current
     re-engineering process and highlighted the fact that the union
     deadlocked with management over the issue and have formally
     walked away from the consultation process, which was facilitated by
     the CCMA. SACCAWU has also rejected the alternative flexible
     model, which eliminated the need for involuntary retrenchments. The
     company has no other option but to proceed with its re-engineering
     process, which will result in retrenchments.” Your comment?
20   MR PATTISON: Yes, the background of that is I think an agreement
     reached between Bobby Godsell, Zulunsile Mbvavi and I think there
     was someone else that in the financial crisis all attempts should be
     made to avoid retrenchments. And so on that basis we approached the


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     union to see if they would accept a slightly different, not slightly, a
     different employment of contract, still in terms of the contracts
     allowed under the sectoral determination in an effort to reduce the
     number of retrenchments to zero, they rejected that.
     ADV GAUNTLETT: Yes, ultimately Mr Pattison, and I think it’s in
     paragraph 7.10 of your witness statement, but in short that
     retrenchment process which played out through consultative process,
     a lock out, labour court proceedings and the like, what was the
     ultimate effect as regards the compliance with South African Labour
10   Law of what was done?
     MR PATTISON: It was tested at every point as you know, the rights
     of SACCAWU and as far as I’m aware there was no decision ever
     overturned.
     ADV GAUNTLETT: May we move to the question of a toolkit which
     was put in front of you. Now that toolkit and I think you may have
     made the point, but I think it will be common cause that that’s a
     document obtained by the union, it doesn’t come from Wal-Mart
     papers and it is put in and been put to you, is that right?
     MR PATTISON: Correct, as far as the unions told me it was that
20   Wal-Mart USA toolkit. Wal-Mart has never shared that toolkit with
     me.
     ADV GAUNTLETT: Do you know how old it is?
     MR PATTISON: I am not aware how old it is.


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     ADV GAUNTLETT: Do you know if it’s in current circulation, even
     in the United States?
     MR PATTISON: I’m not aware of that.
     ADV GAUNTLETT: And it may arise from the earlier question, has
     there been any effort to commend it to Massmart and indicate it as
     being an essential tool in your future life?
     MR PATTISON: The opposite is true. Wal-Mart from day one has
     said to us that they are going to recognise existing union agreements
     and encourage us to work with the unions. So certainly nothing has
10   been proposed of the sort.
     ADV GAUNTLETT: Now Mr Bond is the Wal-Mart witness, but Mr
     Pattison from your own world travels and exposure to Wal-Mart
     operations in a number of countries, could you explain to the Tribunal
     what view you formed as regards the degree to which operations,
     Wal-Mart operations in other countries seek or don’t seek to operate
     in compliance with local labour requirements?
     MR PATTISON: Well in fact to the markets I have travelled it’s quite
     remarkable to see just how local Wal-Mart is and certainly that was
     important to me, and not only because of the unions, the issue. As you
20   can imagine the union issue is more of an issue to the unions than me,
     but to also see that they adjust all parts of their strategy to suit local
     conditions.




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     ADV GAUNTLETT: And your own view, you’re a person who has
     been a CEO of the Massmart group for a considerable period now,
     what would be your expectation of … what would be your estimate of
     the life expectation and the CCMA and the Labour Courts, any
     attempt to press and to service that Wal-Mart toolkit of unknown
     data?
     MR PATTISON: You wouldn’t be able to do it at all. I think that
     conflicts … I mean that toolkit which I read, conflicts completely
     with South African law.
10   ADV GAUNTLETT: Now could we turn to the issue of imports. It
     appears from the papers before the Tribunal, I think Massmart’s total
     annual purchases are currently of the order of?
     MR PATTISON: 40 billion, 45 billion.
     ADV GAUNTLETT: I think it’s 42 billion,
     MR PATTISON: Between 42 and 45 billion.
     ADV GAUNTLETT: Could we be clear, what percentage of that
     currently is direct imports?
     MR PATTISON: At our last recording, it was about 5%.
     ADV GAUNTLETT: And as regards indirect imports and there was
20   much debate between you and Mr Bhana trying to understand what is
     direct and indirect and where agencies fit in, but do you, yourself
     have any clear idea of what percentage there is as regards indirect
     imports?


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     MR PATTISON: I must tell you that we by record, so by the way the
     company keeps a record, have no idea about that what is it. And again
     if you were to ask me that question I would still ask you what is your
     definition of local manufactured, local content, so we don’t have an
     exact number. However, we did try to figure it out and I must say this
     was a high level set of guesses and asked to guess, I think we come
     up with a number of about, on top of that 5%, 35% probably as
     indirect, but as I say it could be different, I don’t think it would be
     substantially different, but it could be different to that number.
10   ADV GAUNTLETT: Mr Pattison I’m not asking you to give away a
     trade secret, but could you state as clearly and as shortly and as
     simply as you can, what do you see as being the essential secret in
     successful retail? What is the formula that you see, and I’m going to
     ask you thereafter, how would it change under the infusion of new IP
     and etc, from Wal-Mart?
     MR PATTISON: If I could confine my response to that to the type of
     retailing that’s called Mass Merchandising. The essential secret is we
     all buy the goods from the same price X factory gate. I think, you
     know, you could say that sometimes you win and sometimes you
20   loose, but essentially I don’t think you can rely on a substantially
     lower price X factory gate. But that X factory gate price is quite a
     small percentage, and probably smaller than you think, let me say
     rather, of the final selling price on shelf.


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           And so the real secret to our type of retailing is to get it from
     the factory gate onto the shelf and into the consumers home for the
     lowest cost. Now again it may jump into your mind that that’s
     somehow labour. It isn’t. It is mostly about wastage. An enormous
     amount of goods are wasted. They’re wasted either because they sit
     on shelves too long, they get stolen, they get damaged, we buy too
     much and therefore we have to clear them, we buy too little and
     therefore we’re not able to sell them.
           This in our business is the essential art of retailing, is moving
10   the goods around. There is of course another art, which let me just
     add onto that, is there are perhaps, and I’m guessing, millions of
     products available to be sold on our shelves, and we have to chose
     across the Massmart group, perhaps 120 000 of those millions of
     goods. And obviously the selection of that 120 000 is also a closely
     guarded competitive edge.
     ADV GAUNTLETT: Now Wal-Mart is very sensitive about its
     intellectual property so I’m not going to ask you to give any detail,
     but in broad terms what do you understand will be the difference that
     Wal-Mart methods added to yours will make the way the merged
20   entity, if allowed to merger, would function?
     MR PATTISON: Well what we bring to the party is local knowledge,
     you know it’s impossible sitting in Mexico or Canada or UK to
     understand the subtle dynamics of the South African market. So that’s


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     what Massmart brings, and our relationships with our suppliers and
     vendors and other partners. What Wal-Mart have, because they’re
     way ahead of us and I guess 15 years, they may think it’s more, is
     they have technologies, processes, know-how’s, experiences that
     when we are able to accelerate our learning, I say we would have
     learnt a lot of them anyway just by carrying on as we were, but they
     will accelerate our learning and enable us to take step changes in
     reducing what I call that cost of moving the goods from the factory to
     the shelf.
10   ADV GAUNTLETT: How central all that is an aspect which every
     now and again put its nose into the case and that is distribution
     centres and other distribution mechanisms?
     MR PATTISON: Distribution centres are anomaly, they actually add
     space and costs and stock and systems costs, but distributions centres
     are a enabler of other technologies called space planning, demand
     forecasting and retailing. And really, you have to have them so that
     you can do all the other clever stuff.
     ADV GAUNTLETT: Now your attention was drawn in cross-
     examination in documents a few times, and whether through time
20   constraints or otherwise it was left there, to reference to global
     procurement in Wal-Mart documents and in fact, I think also
     presentations by you and Mr Lamberti, this phrase that Wal-Mart will
     bring global procurement. Could you explain what that as you


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     understand it actually means? Does it mean that somewhere in the
     Ozarks there is a large computer or a person with a very large brain
     who will take decisions for you in Chile? What does global
     procurement mean?
     MR PATTISON: Again it’s more about information than anything
     else. Wal-Mart is not going to procure something in some, as you say,
     office in Bentonville and somehow they’re going to supply us. It’s
     about sharing information. So I’ll go further and tell you what’s the
     first step we’ll do, that 5% directly imported products, we will give
10   the sources specs and prices to Wal-Mart global procurement office
     and they will come back and tell us whether we can approve those
     prices and we’ll start with direct imports. And as I say that will
     displace one direct import for another direct import, actually saving
     the country and the consumers valuable currency.
           We will then probably move on to the agents and again we’ll
     collect all the information about those products imported by us by
     agents, non-branded. We will again just share that information to
     Wal-Mart global procurement and they will come back and say hey,
     we can do better on these things or we can do worse. We will, by the
20   way, place the orders, they will be shipped to South Africa probably
     using Massmart’s distribution system. It’s information, that factory,
     that product, that price.




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     ADV GAUNTLETT: And lastly, Wal-Mart again through Mr Bond
     will speak for itself, but you also and Massmart would have a
     perspective as regards the issue of risk arising through this transaction
     if it is allowed, but subject to conditions which seek to impose some
     form of time lines, quotas, targets and the like. Quite bluntly Mr
     Pattison, from your perspective, what does it do to the viability of the
     proposed merger and the risks that it may raise of proceeding with it
     if there is that sort of imposition of a set of external constraints?
     MR PATTISON: Well any constraint, I think by its nature, will be
10   able to be transferred into some view of extra cost or lost revenue or
     lost profits. Those would have to be by both Wal-Mart and Massmart,
     separately considered and you know, should it change the dynamic of
     the fundamentals envisioned in the economics of the transaction, I
     would imagine that it could put the transaction at prejudice.
     ADV GAUNTLETT: Thank you. Thank you Mr Chairman.
     MR WESSELS: Just one question, you refer to the X factory gate
     price and that being a limited amount of your total cost and you
     indicated before that you estimate labour costs at about 30%. Can you
     give us an indication of what percentage the X factory gate price
20   would be and what would be the other major cost components?
     MR PATTISON: Alright, my apologies. They’re two quite different
     numbers. The 30% labour cost is the 30% of Massmart’s costs. So
     perhaps Massmart’s entirely cost base is made up of 50% leases, 30%


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     labour and 20% would have been sundries. When I was referring to X
     factory gate price, what I was referring to is perhaps although I
     assume everyone in the room is impressed by how cheap TV’s are at
     the moment at Game. You can buy a TV for R2 000.00 fully HD.
     CHAIRPERSON: We charge you for advertising.
     MR PATTISON: Now that TV perhaps cost R500.00 to manufacture.
     Please don’t hold me to that, but perhaps it cost R500.00 to
     manufacture. Perhaps it cost another R500.00 to get into South
     Africa, so we put it on a ship, duties have got to be posed. It’s perhaps
10   cost another R500.00 to get it from the supplier into the Massmart
     store and we may charge, and I’m sure it’s not as high as this,
     R500.00 profit on it. So what I’m trying to point out is of the perhaps
     R2 000.00 final selling price of that incredibly cheap TV, perhaps
     R500.00 of it X factory gate price. Does that answer your question?
     MR WESSELS: It would be very different per product, you would
     really have to…
     MR PATTISON: Yes, that would change a lot per product, but I think
     generally you would be surprised at how low that number is.
     CHAIRPERSON: Sorry, Mr Pattison, you’re excused.
20   ADV GAUNTLETT: I think my colleague Mr Mtshaulana has just
     ordered 2 washing machines and a television Chair. Chair, our next
     witness with you leave is Bond, Andy Bond.
     CHAIRPERSON: Mr Bond if we can have your full names please?


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     MR BOND: Yes, just to continue the humour about my name, my full
     name is Andrew James Bond.
     CHAIRPERSON: Mr Bond there should be a piece of paper with the
     oath on it before you, hope it is.
     MR BOND: No it’s not. Oh, I apologise, no.
     CHAIRPERSON: Let me just say it, do you have any objection to
     taking the oath?
     MR BOND: No.
     CHAIRPERSON: Do you regard the oath as binding on your
10   conscious?
     MR BOND: Yes.
     CHAIRPERSON: Do you swear the evidence that you will give will
     be true, so help me God?
     MR BOND: I do.
     CHAIRPERSON: Thank you. What order are we going in? Same
     order as yesterday?
     ADV KENNEDY: Yes, the arrangement is that I will start Mr Chair.
     CHAIRPERSON: Okay Mr Kennedy.
     ADV KENNEDY: Mr Chair, before I commence with cross-
20   examination of this witness, I’d like to just make a point in response
     to exchange that occurred yesterday between my learned friends. Mr
     Bhana and Mr Gauntlett. There’s was a scarp as to … there was a bit
     of an exchange between my two colleagues?


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     CHAIRPERSON: Is your mic on?
     ADV KENNEDY: Well the button is pushed Mr Chair. It is on, yes.
     In response particularly to what Mr Gauntlett has said. There is no
     agreement as to time allocations, it is not correct that there were no
     objections to the ruling as to time allocations, the correspondence
     indicates otherwise. What seems to be suggested by Mr Gauntlett
     yesterday is that if we had had an objection we should have pursued it
     in March by bringing a review and there has been no review brought.
     With respect, and I don’t propose to argue this, with respect, we all
10   know that to bring a review in the middle of proceedings is extremely
     difficult and to challenge the time allocation before you have actually
     started would be extremely difficult. The fact that we have not
     challenged this by way of a review to a court with jurisdiction does
     not mean to say that we won’t do so in due course, if that is our
     advice to our clients and if those are our instructions from our clients.
           So the fact that there have been no review proceedings thus far
     must not in any way be construed as being a failure to object or an
     acceptance by us or an agreement with the time allocations that have
     been made not by us. Mr Gauntlett in his re-examination of his last
20   witness just a moment ago referred to the fact that we had not
     challenged various contents of the witness Mr Pattison’s statement in
     relation to the retrenchments, which affected, inter alia, but not
     exclusively the Nelspruit operations. There is a simple reason why


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     that was not challenged and that is because we simply have not been
     allowed enough time. If we had been allowed enough time it would
     have taken no doubt a couple of hours to deal properly and fully and
     meaningfully with that.
           We have been given the objecting parties and the Minister as
     an intervening party, a total of three hours in terms of the allocation.
     As it happens Mr Bhana, for understandable reasons, went further
     than that and even that … sorry further than the one hour that we had
     agreed to and as a result overall we have exceeded the allocation for
10   yesterday’s witness Mr Pattison by an hour, hour and a half. What
     then becomes that? We of course can’t control colleagues. We have,
     in good faith, tried to follow the request by the Tribunal to reach a
     rough agreement as to how we are going to split up the time. We
     agreed on two hours, I was two minutes short of two hours yesterday
     on that.
           We are concerned about time running out and particularly in
     relation to later witnesses. We are very concerned also by the
     attempts by particularly Mr Gauntlett to suggest that we have
     somehow agreed to or not objected to the allocation or that we have
20   no challenge to it. We simply have to reserve our rights in these
     circumstances and proceed on the basis that you have ruled
     Chairperson with all of our client’s rights reserved. May I then
     proceed with this witness, subject again to that concern on our part.


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     ADV GAUNTLETT: Sorry Chair before our learned friend does, I do
     need to take two minutes and I am in credit at the moment, two
     minutes just to put our position on record. I won’t repeat what we said
     yesterday and the correspondence will speak for itself. I do want to
     add this Chair that the Tribunal we submit has been very fair and
     perhaps more than fair as regards dealing with the problem of
     interveners. The assumption that interveners before the Tribunal are
     in the same position as the merging parties and the Commission, who
     are not in an adversarial position but in the position of presenting the
10   particular merger up for consideration.
           The analogy and there is some very good Constitutional Court
     authority regarding the position of interveners in Constitutional Court
     proceedings are to be put within certain time limits, allowed a certain
     space, but ultimately they have not … it seems to be taken as implicit,
     no right to an aliquot share of time as has been suggested. We are all
     under time constraints. The United Kingdom Commission operates as
     you have been doing, necessarily because mergers have a need for
     expedition, a need for precision; they are not Privy Council hearings.
     CHAIRPERSON: I would say Mr Kennedy if there were objections
20   they haven’t been brought, certainly to the Tribunal’s attention. The
     only concern was one brought late last week, which involved whether
     you could ask labour related questions of certain witnesses and we




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     gave a direction in that regard. So I am a little bit surprised now by
     the concerns being addressed to us, but let’s move on.
     ADV BHANA: Chair, we just want to take a minute as well just to
     clarify what I had indicated that we had a considerable amount of
     further questions for Mr Pattison, which we were precluded from
     putting because we had already exceeded our allocation. We don’t
     want to debate all of the points raised by Mr Gauntlett or by the
     Tribunal, but we do want to place that on record.
     CHAIRPERSON: Mr Kennedy?
10   ADV KENNEDY: Thank you Mr Chair, if I may then proceed with
     Mr Bond. Mr Bond, you are familiar with the contents of your
     witness statement is that right?
     MR BOND: Yes, I am.
     ADV KENNEDY: And do you recall that you dealt with some of the
     issues relating to labour matters that our clients the unions are
     particularly interested in and you dealt for example with the level of
     union representation, do you recall that?
     MR BOND: Yes, I do in general, if you would like to point to any
     specific points that would be great.
20   ADV KENNEDY: In fact you talked about roughly a half of the Wal-
     Mart of the countries in which Wal-Mart operates as being unionised,
     as operations where the workers or associates as Wal-Mart seems to




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     like to call workers are unionised, in the sense that unions are
     recognised, correct?
     MR BOND: Yes.
     ADV KENNEDY: I would like to ask you particularly about the
     situation in the US. You are the … just remind us of your position;
     you are a vice president of Wal-Mart?
     MR BOND: I am an executive vice president. I have no responsibility
     for the US. I have operational experience in the UK. I have been
     responsible for leading the team that has done the deal here in South
10   Africa. I am reasonably well informed and very well informed of the
     overall strategy of the company and our overall views and policies,
     but I am not informed necessarily in every detail in the US business.
     ADV KENNEDY: Yes, certainly time does not permit us to get into
     much detail, but the basic detail that we do need to get into now, I am
     sure that you are familiar with. Is it correct that there are
     approximately 1.3 million workers employed by Wal-Mart in its
     United States’ operations alone?
     MR BOND: Yes correct.
     ADV KENNEDY: Overall worldwide in the countries in which
20   operates the group employs a total of approximately 2.1 million
     workers, is that right?
     MR BOND: Correct.




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     ADV KENNEDY: So we are talking about 7 to 800 000 workers who
     are employed outside the US.
     MR BOND: Yes.
     ADV KENNEDY: Two thirds in the US and you confirm do you that
     in none of the Wal-Mart operations in the United States are workers
     unionised?
     MR BOND: Correct.
     ADV KENNEDY: 1.3 million out of the 2.1 worldwide workers are
     not unionised in the United States?
10   MR BOND: Correct, it is recognised that only 5% of retail workforce
     in the US is unionised.
     ADV KENNEDY: But you have none at all.
     MR BOND: No.
     ADV KENNEDY: Correct?
     MR BOND: Correct.
     ADV KENNEDY: And what is the position in your own country,
     which surely you can talk to that is the UK?
     MR BOND: Yes, we have union representation with the union called
     the GMB, it is in my view and I think in the view of the union a
20   constructive arrangement and there has been a number of different
     partners to it in retail and distribution but CIRCA 25% of the
     workforce is unionised.
     ADV KENNEDY: 25% what is the total workforce for the UK?


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     MR BOND: 170 000.
     ADV KENNEDY: 170 000 and how is that made up, could you split
     that between … could you show us the split between store workers
     and distribution centre workers?
     MR BOND: I am sort of estimating numbers I am no longer
     responsible for the UK business, but it is CIRCA 130 000 in stores,
     35 000 in distribution centres and the rest in the home offices.
     ADV KENNEDY: And as I understand it some of the distribution
     workers are unionised?
10   MR BOND: And some of the store people yes. There is a higher
     density of union representation in distribution than in stores.
     ADV KENNEDY: What is the level of unionisation amongst store
     workers? I am told that in fact store workers are not unionised?
     MR BOND: That is incorrect. There is a percentage, which is
     impossible for me to give, because data protection does not allow us
     to know that.
     ADV KENNEDY: Unionised in what sense? They belong to a union
     or are the unions recognised?
     MR BOND: No, they belong to the union and the union is recognised
20   through a partnership agreement.
     ADV KENNEDY: My instructions are that in fact there are no
     workers in stores employed in the UK if you are unionised...
     [Talking simultaneously]


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     ADV KENNEDY: Sorry, please don’t interrupt me.
     MR BOND: My apologies.
     ADV KENNEDY: We are going to cause absolute chaos, Mr Bond,
     particularly for transcribers if we both talk at once.
     MR BOND: Okay.
     ADV KENNEDY: My instructions are that there is no unionisation of
     store workers of any meaningful amount or degree by unions that are
     recognised by management?
     MR BOND: That is incorrect. There is a partnership agreement
10   between the GMB and the company, which allows the people to be
     unionised. The point I was making is I can’t give you an accurate
     number because the associates of the company pay their union dues
     direct to the union and we have no accurate information as to how
     many people are unionised, but there is a union agreement.
     ADV KENNEDY: Do you have a collective bargaining relationship
     with the union?
     MR BOND: We do in distribution in some of the distribution centres.
     In the stores it is what is called a partnership agreement, which is a
     recognised structure of the union agreement.
20   ADV KENNEDY: But is there collective bargaining?
     MR BOND: No, there is not.
     ADV KENNEDY: No? So in other words, out of approximately
     170 000 workers employed in both stores, distribution and other parts


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     of your operations in the UK there is no collective bargaining for the
     130 000 odd in the stores.
     MR BOND: That is correct.
     ADV KENNEDY: And collective bargaining does take place in
     relation to your other operations, which represent a small proportion
     of your total workforce overall, would that be fair to say?
     MR BOND: I agree with all you said, other than you know it depends
     what proportion represents a small proportion. Yes, you characterise
     it accurately.
10   ADV KENNEDY: Are you familiar with the situation in Canada?
     MR BOND: Reasonably yes.
     ADV KENNEDY: There are approximately I am told something like
     85 000 employees employed at approximately 320 stores in Canada,
     does that sound right to you?
     MR BOND: That sounds about right.
     ADV KENNEDY: And do you dispute that in fact when the union
     UFCW in Canada organised a Wal-Mart store in a place that I
     understand is called Jonquiere in Quebec, there was fierce opposition
     by the company and when the union got its way in organising its staff
20   at the Wal-Mart store, Wal-Mart closed the store?
     MR BOND: It is accurate to say Wal-Mart closed the store, the reason
     the store was closed is because the agreement that was reached
     imposed a level of cost on the store that made the store unprofitable


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     and as with operations when a store becomes unprofitable we may
     make the decision to close it.
     ADV KENNEDY: And all the workers then lost their jobs.
     MR BOND: I am not aware of the detail of that, but I would assume
     you are right.
     ADV KENNEDY: Was it because the union became involved or was
     that irrelevant?
     MR BOND: It was because the cost base of the store became so high
     that the store lost money.
10   ADV KENNEDY: And why did the cost base go so high, was it
     because the union was demanding higher wages than was felt
     tolerable by management?
     MR BOND: You would close the store when the cost becomes too
     high, so it was closed because the cost base became too high is that
     related to the imposition of the union relationship yes.
     ADV KENNEDY: Yes.
     MR BOND: Yes.
     ADV KENNEDY: Yes, because generally wages paid to unionised
     workers tends to be higher because unions are generally fairly
20   successful in having an upward rather than a downward movement on
     pressure and influence on wages, not so?
     MR BOND: You referenced that point yesterday. I mean there are
     three factual points to make on that; first of all, our own study in the


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     US, which can be made available to you demonstrates that Wal-Mart
     actually pays on average higher rates of pay than unionised labour in
     retail. Secondly, in the Hyacinth Store in Canada, which is one of the
     other stores it is unionised. The union recognition agreement
     recognises that the existing rate of pay in that store was higher than
     local unionised labour and in my own market in the UK as there is
     evidentially in the top quarter of the payers and so you know I don’t
     get the evidence that you have got that demonstrates that union labour
     is higher paid.
10   ADV KENNEDY: But in fact you have just acknowledged a moment
     ago quite properly and fairly that the involvement of unions tends to
     increase wages, typically.
     MR BOND: No, I merely stated that in the case of the specific
     situation Jonquiere I didn’t mean to allude that it generally happens.
     The evidence demonstrates otherwise I would suggest when you
     know we can share with your own information in the US businesses.
     ADV KENNEDY: Well in fact there has been a fair bit of material
     that you have shared and material that we have shared too and that
     will be debated at another stage.
20   MR BOND: Okay.
     ADV KENNEDY: I put it to you that it is simply untenable to
     suggest that unions are generally irrelevant or perhaps even




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     counterproductive as far as advancing wages are concerned for their
     members.
     MR BOND: I think if I can respond to that and I think this links a lot
     to the debate around what Wal-Mart actually does. I think we will talk
     about this in the context of sourcing as well. The bit that is missing in
     this whole debate about wages, about sourcing is that highly
     productive efficient companies can both be low cost to their
     consumers and pay good wages and that is the missing link in your
     argument. We pay people well because we generate a business
10   environment where people are productive, efficient, they make
     money for the company, we lower cost for customers and yet we can
     still afford to pay them well.
     ADV KENNEDY: And yet some of the material seems to suggest
     that in a lot of Wal-Mart operations, particularly in the United States
     where you say wages are better, many of the workers are not only not
     unionised, but often temporary workers provided by what we would
     refer to as labour brokers that there are all sorts of aspects of
     employment of workers in Wal-Mart operations that tend to prejudice
     their position by way of wages...
20   [Talking simultaneously]
     ADV KENNEDY: Simply looking at a permanent worker’s wages in
     one store with that of a competitor is not the whole story, is it?




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     MR BOND: I don’t know why you think I am just comparing
     permanent workers. I think the issue of flexible working is an
     important point we addressed as well, which is one of the points you
     raise. I mean the primary motive for providing flexibility in part time
     working, because it is largely what a lot of the associates who work
     for us, is one, you have got to remember whichever country you are in
     the large majority of people who work in our stores are typically
     women who have kids. And forgive me for characterising this way; it
     is not a discriminatory comment. They want and ask for flexible
10   working part time working to provide an ability to earn money and
     create a lifestyle where they can still be good family members that is
     not a dictate from the company. So you will hear from the other
     witness from Wal-Mart exactly the same situation in Chile, a
     developing market. You will hear that from me in the UK. It is wrong
     to characterise part time working as an imposition from the employer,
     it is the desire and a request from the people who work for us.
     ADV KENNEDY: Would you accept so Mr Bond that whether it is
     right or wrong Wal-Mart internationally has a reputation that it is (a)
     not sympathetic to unions and (b) is not regarded generally as an ideal
20   employer in relation to such issues as terms and conditions?
     MR BOND: No, of course I wouldn’t accept that point. I think if we
     look globally at the business you will find our culture is to be
     considerate and comply with the culture as well as the law of the


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     country. So a lot of the statements you wish to make with regard to
     our business in the US, we have already made the point that only 5%
     of retail workers are unionised. So the vast majority aren’t. I find it
     interesting as a Brit that the big global retailer from Britain is Tesco
     and in the US they are not unionised. And yet where unions are
     relevant, we are more than happy to be part of that process in the UK
     and all the evidence I have given in my submission give evidence
     where unions and that sort of relationship are the norms, we are
     more than happy to be involved in that way. And furthermore your
10   point about more generally about the fact that we are not seen as
     good employer in markets where people have choices as to where
     they work, why do we have some of the lowest labour turnover in
     those markets where the UK, the US, Canada, Chile and I can speak
     very specifically about the UK we have by far the lowest labour
     turnover of any retailer that is because we are a good employer, not
     a bad employer. So I refute strongly the accusation you make.
     ADV KENNEDY: Well the point was not that the accusation is
     necessarily sorry that the perception is necessarily correct. I said
     right or wrong there is a perception. Isn’t it correct that Wal-Mart
20   battles with the fact that it has a measure of notoriety a bad
     reputation around the world; would you agree that it has that
     reputation though you would say that it is an unjustified reputation?




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     MR BOND: I wouldn’t say it has a bad reputation around the world,
     no. I would give you a specific example why did the head of the
     union in the UK write to members of unions here stating what a great
     employer and a good union partner Wal-Mart was in the UK.
     ADV KENNEDY: Books have been written about Wal-Mart,
     numerous articles have been written about Wal-Mart not so? You
     familiar with the witness statement presumably of Prof Lichtenstein
     and now Prof Bond who has had to replace him, you are aware of that
     are you? I beg your pardon Jacobs.
10   MR BOND: I wish I could be called Prof Bond.
     ADV KENNEDY: I am not elevating your … I am sorry Mr Bond, I
     meant Mr Jacobs thank you.
     MR BOND: Go on.
     ADV KENNEDY: You are familiar with what they have written and
     others indeed about Wal-Mart and its reputation as far as union
     relations and workers’ rights and interests are concerned.
     MR BOND: I am familiar with those articles, yes.
     ADV KENNEDY: And are you suggesting that they have simply
     sucked out of their thumb their indication that there is a widespread
20   reputation that Wal-Mart has in relation to those issues.
     MR BOND: They are projecting a point of view. They are not
     necessarily representing the common view of Wal-Mart. One of the
     things I think aids, is in making sure we are not seen like we are


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     totally misaligned. I think one of the things that I have got to
     recognise is the fact that as a big business Wal-Mart will on
     occasions, just as any business make mistakes, because you are a big
     business the quantity of those seem large. I think the weight is square
     this office, the only statistic that I have on this which brings it
     together is the number of complaints that are brought against Wal-
     Mart for its associate relationships as measured by an independent
     complaints committee NRLB and if you understand that Wal-Mart
     employs 1% of the private sector workforce in the US and yet only
10   has .06% of the registered complaints I think on one hand that number
     will be large, because Wal-Mart is a large company. But I think you
     have got to look at things from a run rate, a percentage point of view,
     because that is the only fair and reasonable way to look at things.
     ADV KENNEDY: Are you aware that Human Rights Watch, a very
     widely respected international human rights agency has in fact made a
     report giving findings as to violations by Wal-Mart of organisational
     rights of workers in the United States?
     MR BOND: I am aware of that, yes.
     ADV KENNEDY: Yes and were they completely unjustified?
20   MR BOND: I am not aware of the detail, but again I can only
     emphasise the fact that when you are a big company a relatively small
     percentage of poor practice end up as a big number. There is no
     getting away from those facts. Do I see us as a poor employer is that


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     my experience? Have I ever seen anything personally that disgraces
     me? Absolutely not, you know, I have been a proud employee and a
     leader of Wal-Mart for a long time and I am the sort of guy who
     influences the shape or what the company does, as I hope I will here.
     And that is absolutely not the way we run our business.
     ADV KENNEDY: Do you use this toolkit that we made reference to
     you? You of course were sitting throughout Mr Pattison’s cross-
     examination yesterday not so?
     MR BOND: It might be worthwhile me introduce that by explaining
10   this rather generic term “toolkit”.
     ADV KENNEDY: Sorry, will you answer my question please?
     MR BOND: I will if you allow me to explain what it is.
     ADV KENNEDY: No, let’s take it one at a time. I think I did give
     you a multi pronged question, which was unfair, so let’s un-prong it
     as it were.
     MR BOND: Go on then.
     ADV KENNEDY: You were sitting throughout yesterday during the
     entire, Mr Pattison’s cross-examination not so, correct?
     MR BOND: Yes.
20   ADV KENNEDY: And you heard reference, for example, to the
     toolkits?
     MR BOND: Yes.
     ADV KENNEDY: Two toolkits.


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     MR BOND: Yes.
     ADV KENNEDY: That were referred to by me during my cross-
     examination of Mr Pattison and one of them, I took him through
     particularly with reference to the approach of Wal-Mart to unions,
     you familiar with that line of questioning that I put to him?
     MR BOND: Well just allow me if you would, forgive me that is not a
     toolkit that document. I need to contextualise that.
     ADV KENNEDY: Right.
     MR BOND: You are misusing the term “toolkit”.
10   ADV KENNEDY: Yes.
     MR BOND: The term “toolkit” as reference in the submissions is a
     term that we have used until two, three years’ Wal-Mart generally
     integrated business, and its own business had no formal structure of
     ways of sharing best practices. You have heard from Mr Pattison his
     expectations and some of those best practices such as sharing
     forecasting techniques to improve supply chain efficiency. We
     formalised those documents through a piece of work that was done
     with an outside consultant called Operation Forge that generated a set
     of documentation, which was a set of narratives around best
20   practices. Those documents are called toolkits. There is no document
     that I have ever seen and I am aware of and I have clarified this that
     has anything, there is no documentation about colleague association
     with unions, there is no toolkit. That document that you presented


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     yesterday is a document that is an internal document to Wal-Mart US
     and has no association with global toolkits. I have never seen that
     document, it has never been distributed internationally and once more
     if you look at some of the detail and I have only skim read it, I think
     you miss characterise it as a heinous crime against unions. It clearly
     just demonstrates a best practice in the way as a manager you deal
     with your associates and you are still wanting to have one to one
     updates with the colleagues, good communication isn’t anti union.
     ADV KENNEDY: Well in fact it goes much further than that,
10   because it specifically says that Wal-Mart does not encourage. In fact
     it, on the contrary, discourages third party representation and
     encourages rather direct dealings between management and their
     employees without union involvement, not so?
     MR BOND: That as I referred to is something I have never seen
     before you presented yesterday. It is not a document that is used
     anywhere outside the US and I am unclear if the document is still in
     circulation now.
     ADV KENNEDY: But does it not give you some concern because it,
     if it reflects what Wal-Mart US regards as best practice for handling
20   unions and union members and workers’ rights in the United States,
     does it not cause you concern? After all you are the vice president of
     the international Wal-Mart not so?




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     MR BOND: As the guy who ran the UK business for five years, the
     guy who has had up and down relationships with unions, I have never
     seen that document it was never imposed on me as Mr Pattison
     characterised yesterday...
     ADV KENNEDY: But that is not answering the question Mr Bond.
     MR BOND: No, it doesn’t worry me in the sense that even if it is a
     document that is in circulation now and I am not sure it is, and then it
     is not in any way anything to do with the business outside the US. I
     am trying to answer your question by saying as a guy who ran a
10   business outside the US; I have never seen the document. I have never
     been asked to implement that, so it doesn’t worry me, no.
     ADV KENNEDY: But what is your own philosophy as far as the
     Wal-Mart statements in their United States material concerning
     avoiding, minimising and avoiding the involvement in unions in any
     relationship between management and their employees?
     MR BOND: Well look as I have explained previously, it is absolutely
     the company policy to abide by the law, the common cultures of
     countries. And I was allowed to do that very much in the UK. I have
     actually made public statements here in South Africa on behalf of
20   Wal-Mart that we will not only honour the rule of law, but the
     existing union agreements and the general culture of this. And what’s
     more, Mr Kelvin said the same, so does that worry me and am I




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     concerned about it? No. Do I have a point of view? I don’t have a
     point of view on the culture of the US.
     ADV KENNEDY: Do you understand though the measure of
     apprehension that our client, unions, our union clients have, in
     relation to Wal-Mart, being such a massive organisation, taking over
     control of a local huge retail group in South African terms, where it
     has the reputation and it has at least in the United States the
     documentation that bears out that it is in fact trying to suppress or at
     least minimise and avoid the involvement of unions and their role?
10   MR BOND: No, I am not concerned with that. Forgive me. I am not
     going to be repressive. The points I have made previously is not
     something that worries me, because we have made statements here. I
     am very confident that we are a company that abides by local culture.
     ADV KENNEDY: The question though was not your apprehension
     Mr Bond. The question was do you understand the level of
     apprehension on behalf of the unions? Can you just for a moment try
     and put yourself in the shoes of a unionist representing under difficult
     circumstances members here in a situation where there has been a
     collective bargaining relationship, where there have been ups and
20   downs in that relationship and along comes the largest company in
     the world to take over this group with that sort of reputation and with
     that sort of policy and practice at least in the United States? Do you at




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     least accept that there is a perception problem on the part of the
     unions?
     MR BOND: I can’t be a union member here. I’m not South African,
     but to answer your question, we have tried to allay any fears that may
     be there. We, not just myself, the company overall and myself have
     stood up and made public commitment to not only abide by the law,
     but honour existing unions agreements. I’ve stood in front of the
     union and done the same. I feel that we’ve done what we can and I
     can’t comment on how other people feel.
10   ADV KENNEDY: Is it not part of the very Wal-Mart model that
     made it such a success going back to some decades ago in the United
     States that the amount of costs associated with labour had been able
     to be brought down, compared with competitors?
     MR BOND: In answering that question, as I said before, we have
     been a very, very successful company, growing our business,
     employing more people and employing people at a higher cost or a
     higher wage level not because we are anti-union, but because we are
     amazingly successful at growing efficient supply chains. Everyone
     can win if you are world class, delivering goods at a low price to your
20   stores.
     ADV KENNEDY: But part of that is the less costly use of labour, not
     so? For example, Sam Walton introduced before anybody else did, as




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     I understand it, barcode technology in the United States and was
     therefore able to reduce the number of cashiers, not so?
     MR BOND: Forgive me for interrupting. First of all, to clarify my
     emphasis before, the people who work for Wal-Mart, and it is our
     strong assertion and we have evidence of this, are paid well. The
     point that I would agree, the one to contextualise is do we drive very
     hard productive efficiencies? Yes, but this is not a zero sum game.
     We’ve got to understand that economies grow. We want to grow as
     economies grow. We want to lower the cost to doing business, but
10   overall in every country we do business, we end up employing more
     people, because we are productive, we lower the cost of goods for
     people, we drive people out of poverty, because they can buy goods
     more cheaply with us. People shop with us and so we employ more
     people.
     ADV KENNEDY: Chair, I see it’s the time when you normally take
     tea. Would this be a convenient time for tea?
     CHAIRPERSON: Yes, let’s take the tea break for 15 minutes.


                                       Adjournment
20   On resumption:
     CHAIRPERSON: Mr Kennedy?
     ADV KENNEDY: Thank you Mr Chair. Mr Bond we disagree with a
     great deal of your evidence, particularly in relation to the United


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     States. We don’t have time to deal with all of the aspects, I just want
     to put on record that we don’t agree with much of what you said,
     some of that will be addressed, hopefully, in the evidence of our own
     expert when he’s cross-examined by the merging parties. I just want
     to go back to a couple of points that you raised in relation to the
     position in the United States. Of course in relation to union
     representivity, you’ve indicated that there’s a relatively modest level
     of union representivity among retailers generally, among the
     competitors of Wal-Mart.
10           Of course one much acknowledge, must one not, that a great …
     a fairly substantial proportion of retailers comprises very small
     operations where typically union representation is much lower, not
     so?
     MR BOND: I don’t know. I’ve only got the top line numbers to hand,
     I can tell you about specific examples. I know about Wal-Mart’s
     closest competitors which are Big Box Retailers, typically are not
     unionised, Tesco’s is not unionised. I don’t know the detail beyond
     that.
     ADV KENNEDY: Some of the big competitors are though are they
20   not, for example, Safeway in the United States?
     MR BOND: I can’t disagree as I don’t have the information, so I’ll
     accept what you’re saying.




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     ADV KENNEDY: And Super Value and a group as I understand it,
     it’s call Kroger, is it?
     MR BOND: Kroger.
     ADV KENNEDY: Kroger, sorry K-R-O-G-E, is that right?
     MR BOND: G-E-R.
     ADV KENNEDY: G-E-R. As I understand it from my clients and
     those who are assisting us with evidence, including union officials
     from the United States, the typical level of representivity of unions in
     those operations is around 70%?
10   MR BOND: I can’t question that.
     ADV KENNEDY: You don’t dispute?
     MR BOND: I can’t dispute that, but I can emphasise only 5% of the
     retail work force in the US is unionised.
     ADV KENNEDY: Yes, but would you agree with me that it is
     relevant to compare Wal-Mart with some of its competitors and if one
     looks at these three major competitors of Wal-Mart, they have
     approximately 70% typically union representation, whereas in Wal-
     Mart it’s nil.
     MR BOND: I question if that’s a comparison. There were many other
20   comparisons merely by the nature of maths were 95% of the people
     aren’t unionised and must therefore be many more examples of where
     competitors unionised.




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     ADV KENNEDY: And then we had some debate about the benefits
     or dubious benefits that you seem to suggest as to the workers being
     unionised as reflected in wage outcomes. I’ve got here in front of me
     a figure for Sam’s Club, a cashiers average hourly wage at Sam’s
     Club, which of course is a major entity of Wal-Mart, not so?
     MR BOND: Yes.
     ADV KENNEDY: That currently is, the average hourly wage for a
     cashier is $9.48 whereas as Cusco, one of Wal-Mart’s or one of
     Sam’s Club competitors it’s $15.50, substantially higher?
10   MR BOND: I can’t dispute the numbers as I don’t … if we want a
     sort of challenge of the detail then I will again submit the discussion I
     made earlier about our evidence around the fact that Wal-Mart versus
     unionised activity in the US, we pay more and I can refer to those
     numbers. And they demonstrate that we pay more, so…
     ADV KENNEDY: Well I’m afraid the promise of some informational
     documents being available at a later stage doesn’t really help us.
     MR BOND: Well if I can, if I can refer to them because they
     demonstrate the opposite of your point?
     ADV KENNEDY: Well in fact I’m afraid we don’t have time to go
20   into that. The experts will deal with that too and unfortunately we
     simply are not allowed the opportunity to go into all of that, but I
     think we need to just put on record that our information and our
     instructions and our position is very different from your own. In


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     relation to … yes, I’d like to get back now to another point that you
     made earlier and that is the attitude of Wal-Mart to unions and the
     commitments that have been made in relation to the proposed
     transaction with Massmart. You recall you referred to commitments,
     Mr Bond?
     MR BOND: Yes, I do.
     ADV KENNEDY: Are you listening to the question?
     MR BOND: Yes.
     ADV KENNEDY: Good. Can you remind us what those
10   commitments are, what commitments, public commitments were you
     referring to?
     MR BOND: The specific … the background to this I should say, is
     that I must emphasise again that it is a company culture that the chief
     executive and the board of each local country would decide on the
     union arrangements that are relevant for their market. So any future
     dealings with the union in South Africa will be dealt with through the
     board of Massmart and it will be the decision of Grant Pattison and
     the board. That is context. What we specifically have said publicly
     through the media is to reassure people, which was your concern
20   earlier, that we’ve not only complied by the rule of law, but we would
     commit to union arrangements not being degraded from where they
     are today.




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     ADV KENNEDY: Yes, if I can just remind you what you said at
     paragraph 61 of your witness statement, I’ll read the entire paragraph
     into the record, you’re welcome to follow it with me if you want to
     check that I’m reading it correctly. “As indicated above, Wal-Mart
     honours existing union relationships and contracts within acquired
     companies as has been the case in various other transactions that
     Wal-Mart has completed around the world. In line with this general
     policy, Wal-Mart is committed to working constructively with the
     local unions in South Africa.” Now you’ve heard the fears and
10   apprehensions on the part of our union clients in relation to Wal-
     Mart’s approach generally in this regard. And they fear that this
     commitment may not be either honoured or realistic and so we’ve put,
     for example, as you heard yesterday to Mr Pattison the question of
     whether there would be any willingness on the part of the merging
     parties, and you’re here to speak on behalf of Wal-Mart, to give
     something a bit more concrete and definite and enforceable than these
     somewhat vague and currently unenforceable commitments that say
     really nothing more than just well we’ll just carry on with our union
     relationships. Is there anything that you can suggest that can address
20   those concerns and apprehensions on the part of our union clients?
     MR BOND: We’ve already committed to honouring existing
     arrangements and as have reinforced whilst with merging parties, I
     must make clear that is our company strategy that local union


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     arrangements will be decided by local management. So I can merely
     reinforce the comments and assertions that Mr Pattison made
     yesterday, because it will ultimately be him that makes those
     decisions, not anyone higher up in Wal-Mart.
     ADV KENNEDY: And of course one of the facts that have given
     cause for concern on the part of our clients is a series of actions taken
     fairly recently by management. The one was the retrenchments
     concerning just over 500 people.
     MR BOND: Yes.
10   ADV KENNEDY: Were you made aware of those retrenchments?
     MR BOND: No we were not.
     ADV KENNEDY: Were you completely, blissfully unaware of it in
     all your discussions with the Massmart representatives in the
     discussions concerning this possible deal?
     MR BOND: We were. Largely because…
     ADV KENNEDY: You were told?
     MR BOND: No sir, we were unaware.
     ADV KENNEDY: You were unaware?
     MR BOND: Correct.
20   ADV KENNEDY: The other point of concern that I raised briefly
     with Mr Pattison yesterday concerned an agreement reached directly
     between management and workers in a town here called Nelspruit.
     And that Mr Pattison conceded was in fact in violation of agreements.


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     It does seem to us to be a rather strange coincidence that it happened
     both at the time when the parties were in quite serious discussions
     about a possible merger, but also that is seemed to be quite consistent
     with the Wal-Mart policy that we debated earlier today that applies in
     the United States, namely one-on-one dealings between management
     and employees rather that with their so-called third party
     representation, in other words, the union, not so?
     MR BOND: I recognise the position that it’s a coincidence and it is
     exactly that. And if you want me to give you Wal-Mart’s perspective
10   on that period of time, which was part of the discussions yesterday, I
     can do, but to just summarise it is pure coincidence.
     ADV KENNEDY: Pure coincidence?
     MR BOND: Yes absolutely.
     ADV KENNEDY: I cross-examined Mr Pattison about the possibility
     of some enforceable agreement rather than just a vague indication of
     well this is what we’re intending to do. Some firm undertaking that
     for example, the recognition of unions currently would continue even
     if the threshold requirements in terms of our legislation might not be
     maintained, for some acceptable period. Now if in fact you are
20   intending and Mr Pattison has said that from his side as local
     management he is intending to promote rather than undermine the
     collective bargaining relationship and recognition and so forth. Why




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     is there difficulty, or is there any difficulty in giving that as a firm,
     enforceable undertaking?
     MR BOND: Forgive me for being repetitive, but our company culture
     will be that the board of Massmart led by Mr Pattison will make those
     decisions locally and I can offer you no more than to say we will
     support his recommendations.
     ADV KENNEDY: And has that not been discussed as yet?
     MR BOND: No, we don’t own the company and there’s a lot of
     matters to do with the company that of course have not been
10   discussed yet.
     ADV KENNEDY: But of course this is your opportunity as the
     perspective merging parties, when seeking approval from this
     Tribunal to address the sort of issues that we are raising, which we
     will argue in due course, are important issues particularly in relation
     the public interest consideration. So it just seems to us to be a
     surprising that we’re really fogged off by saying well, everything is
     going to be fine and local management will continue and what local
     management recommend, we will probably at board level once the
     merger takes place, approve it, but in other words, well trust us, don’t
20   worry. It’s not giving our clients any comfort and what I’m
     suggesting to you is that this is the golden opportunity for you to
     address our clients concerns.




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     MR BOND: I believe addressing their concerns is quite a
     fundamental effort, which is that we will not be exporting cultures for
     any country into South Africa. It is our respect for South African
     culture law that says we will respect the leaderships decision here on
     how they want to take the union relationship forward. We’ve
     underwritten that by a clear commitment that we will honour both the
     law and existing agreements. I feel that the most important
     commitment we can make is to demonstrate that we aren’t going to
     imposing cultures and legislation from elsewhere in the world.
10   ADV KENNEDY: Of course in terms of the deal you will take, Wal-
     Mart International will take a control of Massmart, not so?
     MR BOND: We will, yes.
     ADV KENNEDY: And appoint board members?
     MR BOND: Appoint board members within the guidelines of the
     recognised king code, which is good governance of the board.
     ADV KENNEDY: Sure.
     MR BOND: So more independent than executive directors, yes.
     ADV KENNEDY: But as far as operational issues are concerned, is it
     not fair to say that Wal-Mart’s representatives on the board will have
20   a fair amount of say in relation to how matters are to be conducted,
     including labour matters, not so?
     MR BOND: Yes, but within the guidelines and principles I’ve just
     talked about. I’ve run the business in the UK for 5 years, I ran it to the


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     best of my ability and within the culture as well as the legislation of
     the UK. I never had anything imposed on me, not only in the issue of
     unions, but in general operational practice. The only things that were
     imposed were legislative things, which is FCPA.
     ADV KENNEDY: As you sit here, is it correct that the merging
     parties are not prepared to give an enforceable undertaking that the
     collective bargaining relationship with the union will be preserved for
     a reasonable period, even if the threshold requirements are no longer
     met?
10   MR BOND: Without referring to the detail of the transcript from
     yesterday, I would reinforce whatever the detail of what Mr Pattison
     said, because that way…
     ADV KENNEDY: Well he didn’t give us a commitment.
     MR BOND: Okay in which I will not give one.
     ADV KENNEDY: And you’re not prepared to either?
     MR BOND: I will not be changing the stance of Mr Pattison, no.
     ADV KENNEDY: And are you prepared to make any commitment,
     for example, as to a closed shop agreement or an agency shop
     arrangement?
20   MR BOND: I’m not willing to change the perspective of Mr Pattison,
     no.




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     ADV KENNEDY: A point in relation to the United States history of
     Wal-Mart in the United States and its litigation history you referred to
     the NRLB.
     MR BOND: Yes.
     ADV KENNEDY: And their statistics. Is it correct in the United
     States they distinguish between labour disputes and employment
     disputes and those labels have a particular significance and labour as I
     understand it, concerns primarily the collective bargaining type
     relationship issues, whereas employment deals more with terms and
10   conditions of employment and dismissals as so forth, not so?
     MR BOND: I’m not aware of the detail, but my understanding and
     what I’ve been told is that that is the most representative sample of
     overall relationship complaints between employer and employee.
     ADV KENNEDY: Yes, that’s labour, the labour dispute category, not
     so? It is dealt with by the NRLB?
     MR BOND: I don’t know, you have evidence that I don’t. If you like
     to demonstrate the detail, I don’t know.
     ADV KENNEDY: But you’re not an expert on this?
     MR BOND: No.
20   ADV KENNEDY: As I understand it, the NRLB deals effectively
     with the relationship between management and unions and it’s hardly
     surprising, it is Mr Bond, that the figures relating to Wal-Mart are so




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     small in relation to NRLB litigation where there is no level of
     unionisation in the United States in Wal-Mart operations?
     MR BOND: I can’t dispute your point, but I’d like you to
     demonstrate the point you’re making in terms of the … because my
     information is different from yours.
     ADV KENNEDY: Okay you can’t accept it, but you can’t prove
     otherwise as we sit here?
     MR BOND: No I can’t.
     ADV KENNEDY: And then currently there is … a few weeks ago
10   there was a US Supreme Court hearing in the matter of Dukes and
     Wal-Mart, are you familiar with that?
     MR BOND: I am, yes.
     ADV KENNEDY: That involves a class action brought by 1.5 million
     female employees, not so?
     MR BOND: I can’t dispute that. I don’t know the detail of the
     numbers.
     ADV KENNEDY: And the figures that we have are that Wal-Mart
     has settled 62 class actions in relation to wage issues, correct?
     MR BOND: In all cases Wal-Mart did not admit responsibility or
20   guilt. You will know better than me that legal costs in America are
     even higher than they are in South Africa. And as such it is often the
     case that the lowest cost activity for a company is settle rather that
     dispute. That doesn’t in anyway recognise admission of guilt.


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     ADV KENNEDY: A fairly lengthy section in your witness summary
     deals with the policies and practices of Wal-Mart in relation to
     prevent workplace abuse in supplier factories. If I can take you to
     your own statement, it’s paragraph 100.
     MR BOND: Yes, I’m with you.
     ADV KENNEDY: I think it’s page 43, I’m not sure.
     MR BOND: Yes, it is 43.
     ADV KENNEDY: And here for some pages you deal with standards
     that are set for suppliers, transparency, monitoring, audit process,
10   audit report assessments, assessment ratings with colours green,
     yellow, orange, red. Red failed, red disapproved, red denied audit
     findings, ethical standards and so forth. And then freedom of
     association, collective bargaining standards for suppliers, you see that
     at the foot of page 49, factory closure and payment of workers
     severance.
     MR BOND: You’re referring to the chart, yes.
     ADV KENNEDY: Yes, and then it goes on, supplier development,
     stakeholder engagement and so it goes on and on. Now that on paper
     looks superficially impressive. As we understand it, you’re effectively
20   saying, we are so concerned not only about our own workers rights
     and interests, but also those of the rights and interests of workers
     employed by our suppliers that we have this system in place to




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     monitor their performance and presumably action is taken if they fail
     to comply, is that right?
     MR BOND: Correct.
     ADV KENNEDY: What do you actually do if a supplier doesn’t
     comply?
     MR BOND: Well I think if we were to read it, I’m not sure, forgive
     me I’m not sure if it’s all in here, but there is a very clear process of
     management and for sure our general company Ethos is not for one of
     bad temper … one strike and you’re out. We’re very much about
10   rehabilitating companies to be good suppliers, but of course there
     comes a point if suppliers cannot meet standards, they will be
     dismissed and all of that sort of policy of remedy is within the
     documentation, which if it’s not in here you’re able to access on the
     Wal-Mart website.
     ADV KENNEDY: Are you familiar with a recently decided case in
     the United States Court of Appeal for the ninth circuit Jane Doe
     matter where various litigants on behalf of workers in Shing Shing,
     China, Dakar, Bangladesh, Bogour, Indonesia, Matsapha, Swaziland,
     which is of course right next door to us, Nicaragua, California
20   workers etc, that that was a case that was decided in the United States
     Court of Appeal, which dealt specifically with the issue of abusive
     rights of suppliers, not Wal-Mart’s, but suppliers employees. Are you
     familiar with that litigation?


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     MR BOND: No, I’m not.
     ADV KENNEDY: And so you wouldn’t dispute then that that in that
     case these workers from various countries around the world where
     Wal-Mart has operations, sued the Wal-Mart International group, the
     Wal-Mart stores incorporated rather, specifically on the basis that the
     Wal-Mart group was liable inter alia because you had the
     mechanisms available to impose standards on suppliers, which you
     had imposed, but had not implemented and they then sought relief
     against Wal-Mart and that was turned down by the court.
10   MR BOND: I can’t … I’ve said, I don’t know the cases so I can’t
     comment on any detail.
     ADV KENNEDY: Yes, the case was dismissed and precisely on the
     basis that whatever standards you have in terms of your agreements
     with your suppliers, the consequences that flow from a breach if Wal-
     Mart has taken the trouble to detect that there is a breach, is that Wal-
     Mart can then terminate the supply agreement with the supplier and a
     consequence of that of course is that the workers who rights have
     been disadvantaged are now out of work. So no longer are they in
     work and not being paid properly, or being discriminated against,
20   they’re now out on the street.
     MR BOND: Clearly I can’t comment on the particulars of that, but
     what I can comment on is my many years of experience around these
     factories around the world. I was a buyer for ASDA for Wal-Mart for


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     many years and have visited many factories around the world and I
     can say very proudly, and by the way I now only work part time for
     Wal-Mart and for a couple of other companies, and I can say
     objectively that our standards of procedures with suppliers are world
     class and ones that I’m very proud of. And very practically I have
     seen a lot of very good practices. I’ve been to these factories, I can’t
     come in at one misdemeanour, but I can also comment on our general
     business principle, which as I say is to rehabilitate rather than cut
     people off at the knees, which I think is your inference.
10   ADV KENNEDY: Well in fact this case that you’re not familiar with,
     so I’ll accept that, this case in fact shows that it’s not some isolated
     minor misdemeanour. It is cases that have been brought by workers
     around the world in various countries, South America, Southern
     Africa, China, elsewhere in the Far East, Indonesia. And what is
     interesting is that instead of Wal-Mart resolving it by saying well we
     will sort that out through our suppliers and put pressure on them to
     treat you workers properly, instead it says, well don’t look to us. And
     the court held that your remedy in terms of your agreement is not to
     enforce the agreement against your suppliers, which you didn’t do in
20   those cases, but rather to terminate if you wished the contract with the
     suppliers. And if you did that then the workers would be losing them
     employment.




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     MR BOND: I can’t doubt the evidence. I guess my response is merely
     to try and context this and try and understand the substantive nature
     of it. We’ve talked about the fact that Wal-Mart’s a very big business.
     We do business in many countries. I’ve been to many, many factories,
     made many many orders and I’ve never been embarrassed by what
     you’re providing one example, I don’t know if this is substantive or
     not.
     ADV KENNEDY: Now I indicated we would take you back to the
     point you suggested we dealt with earlier, which is the events that
10   took place where the parties started talking and exploring towards the
     merger transaction. And as I understand from your own witness
     statement, you had a major involvement in that, not so?
     MR BOND: Yes I did.
     ADV KENNEDY: You were the team leader for Wal-Mart is that
     correct?
     MR BOND: Indeed.
     ADV KENNEDY: Yes, now you heard the evidence rather
     conveniently for you, of Mr Pattison yesterday as to what his
     understanding of the events were in relation to when for example,
20   Wal-Mart and Massmart started serious talks with a view to the
     possibility of this transaction, when it became a preferred, a primary
     target was one phrase used, and a preferred target and then later the
     exclusive target. Now obviously you’re talking from a perspective of


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     Wal-Mart rather than Massmart and we can understand that Massmart
     might conceivably have had a slightly different understanding at
     different times.
           What from your perspective on behalf of Wal-Mart are the true
     facts in that regard? When was there in fact the beginning of a serious
     discussion between the parties with a view to a possible transaction?
     MR BOND: We may want to refer to the … or you may want to refer
     to particular documents. It certainly might help me in terms of
     specific dates, but to characterise the overall situation, we as a
10   business and forgive me if I take two minutes to explain this. We as a
     business have a very clear filtration process that first of all tells us the
     markets we’d like to be in based on certain criteria that are good for
     us a business.
           We then, within that context, then decide on companies we
     may wish to approach. South Africa as we heard yesterday has been
     on our target market list for quite some time. Within the context of
     South Africa, a number of companies of which Massmart is one, has
     been on our radar for some time. But it’s also true to say other
     markets and other companies have been on our target list. And just as,
20   forgive me with analogy, if you’re buying a house, you’re looking
     around and you’re looking a number of different places and you’re
     keeping a number of different warm whilst you’re making your
     decision.


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             And in fact there were two meetings, one in June and July with
     other potential brides, which it was long after and not that long after,
     because it was September. It was literally the first weeks in
     September when we made our decision that our primary target for the
     next step was South Africa. And in that context Massmart … we
     hadn’t even made a decision that our next approach was going to be a
     South African retailer until literally days before we approach
     Massmart.
     ADV KENNEDY: So when do you say Mr Bond, that Wal-Mart
10   decided on Massmart as the preferred target?
     MR BOND: Literally the two or three weeks before September the
     23rd.
     ADV KENNEDY: In 2010?
     MR BOND: Yes.
     ADV KENNEDY: Because your documentation doesn’t reflect that.
     MR BOND: Well what the documentation says, if you’d like to refer
     to the documents, provide you with a different understanding. I may
     be able to help you understand that point of view, but the document
     you referred to yesterday had other targets blanked out and it may be
20   inappropriate to say too much in this forum, but not only have we not
     even thought South Africa was necessarily our preference, neither in
     the context of South Africa. We decided that Massmart was our
     definite target until after a couple of meetings in June and July. And


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     without going too far, one of those meeting in June and July was with
     another South African retailer.
     ADV KENNEDY: You signed a confidentiality agreement between
     Wal-Mart and Massmart as far back as, yes that’s right, I think it’s the
     2nd of February 2009, your answer?
     MR BOND: Yes, as we had them with numerous other retailers who
     are now bride-less.
     ADV KENNEDY: With others, yes I understand that, and as I
     understand the purpose of the agreement, we won’t take you now to
10   that, that’s also confidential, the purpose of that is to ensure
     confidentiality to the extent that you’re going to engage in discussions
     with potential suitors with potential brides, as you put it?
     MR BOND: Yes.
     ADV KENNEDY: If I can take you in the core bundle, you should
     have a file that’s … I think it’s that one, it should be marked core
     bundle. May we send someone to help the witness Mr Chair? It’s the
     bundle we used with Mr Pattison yesterday.
     MR BOND: I think I have it thank you.
     ADV KENNEDY: Right, if I could you ask please to turn to page
20   2653.
     MR BOND: 26?
     ADV KENNEDY: 53. 2653.
     MR BOND: Yes.


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     ADV KENNEDY: And this comes from a document relating to
     November 2009 and this is confidential so we won’t read it into the
     record, but if you could look at the specific reference to Massmart and
     what is referred to in the last column, a meeting and the status of
     Massmart in that regard.
     MR BOND: Yes.
     ADV KENNEDY: And that specifically refers to Massmart as being a
     preferred partner. That is not consistent with your evidence a moment
     ago which is that it became the preferred partner as late as September
10   2010.
     MR BOND: Do you mind if I reply?
     ADV KENNEDY: Please.
     MR BOND: You will notice the submission has got most of the
     transaction information blanked out. I have no ability and correct me
     if you have more information, that doesn’t in any way say that it was
     the preferred partner. It says it is one of the preferred partners across a
     number of markets. It is worthwhile recognising that at this stage of
     the transaction Massmart was the preferred partner in South Africa.
     ADV KENNEDY: Yes.
20   MR BOND: One of the meetings I referred to in June and July was
     with a retailer from another market that at the time was an equally
     important objective for us.
     ADV KENNEDY: It is another market.


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     MR BOND: Correct.
     ADV KENNEDY: Not the Southern African market?
     MR BOND: Correct.
     ADV KENNEDY: Of course you were looking at Massmart, not only
     to get into the South African market, but also as I understand it in a
     way to be a springboard to expand into other countries in Africa.
     MR BOND: Yes, I guess my point is I am trying to suggest that there
     are other markets around the world may at that time have been
     preferable to South Africa and also whilst they were a preferred
10   partner, price and availability are equal matters and the other retailers
     in South Africa were not off the table.
     ADV KENNEDY: Yes.
     MR BOND: Massmart was a preferred partner.
     ADV KENNEDY: Mr Bond, I am not trying to suggest that South
     Africa was your only possible target area in the world. We fully
     understand that, but do you agree that in relation to South Africa and
     the wider African venture, which you were considering as a
     possibility Massmart was the preferred partner at that stage?
     MR BOND: Whilst equal discussions were going on with other
20   parties yes.
     ADV KENNEDY: But other parties in relation to the South African
     venture.
     MR BOND: Correct.


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     ADV KENNEDY: But not categorised in this document as a
     preferred document.
     MR BOND: Correct.
     ADV KENNEDY: That is the point.
     MR BOND: Correct.
     ADV KENNEDY: There are two others that are referred to that you
     presumably met at the same time.
     MR BOND: Correct.
     ADV KENNEDY: In South Africa, but with a view to them being
10   included in your suitor’s list.
     MR BOND: Correct.
     ADV KENNEDY: But the one at the top of the list as the preferred
     partner was Massmart.
     MR BOND: Correct.
     ADV KENNEDY: Correct?
     MR BOND: Yes.
     ADV KENNEDY: And then in March 2010 you were actively
     pursuing an acquisition in South Africa, if I can take you to page
     2659 the words I have just given you in fact are pretty much what
20   appears at page 2659, not so?
     MR BOND: Yes.
     ADV KENNEDY: Middle of the page.
     MR BOND: Yes absolutely.


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     ADV KENNEDY: Yes and then in June 2010 if I can take you to
     2669 again from a confidential Wal-Mart documentation there is a
     reference to the South African possibility, reference to trips that were
     made, the first bullet point refers to a Massmart executive trip both to
     Bentonville in the United States and the UK, you were involved in
     that trip were you?
     MR BOND: In the UK one, yes.
     ADV KENNEDY: Yes and at the foot of the page, the very last line
     of the text refers to Massmart being confirmed as the exclusive target,
10   not so?
     MR BOND: Yes, but I would also refer to the fact that a meeting with
     another South African retailer that was of the same type and activities
     that one referred to here actually was hosted in June and so again,
     forgive me for the analogy, but in buying a house you certainly not
     going to be informing the seller of your options.
     ADV KENNEDY: But the point is that Massmart was still at the top
     of your list and was now in fact confirmed as the exclusive target.
     MR BOND: Whilst I recognise that says that, I dispute … I am just
     trying to clarify what activities were going on. We are not in
20   exclusive talks with Massmart. We were still talking to other parties.
     ADV KENNEDY: Despite the reference to Massmart as being
     confirmed as the exclusive target?
     MR BOND: Correct.


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     ADV KENNEDY: I see. But I would like you please to refer to a
     bundle, which … Mr Chair, I am now going to be taking the witness
     through a few extracts of correspondence that was exchanged that
     emerged from the additional discovery that Massmart made at the
     request of the Tribunal. So everybody knows it, it came from the
     merging parties I don’t believe it has been included in the record with
     specific page numbers. We have prepared a core bundle again and
     hopefully there are sufficient copies immediately available now. I
     understand yesterday when there was a hiccup we didn’t have enough
10   copies for our learned friends, it turned out we did have copies, but
     somebody had moved them off our attorney’s table, so I just reinforce
     there was nothing intentional.
     CHAIRPERSON: If this isn’t in the record already should we just
     give this an exhibit number?
     ADV KENNEDY: I think that should be done.
     CHAIRPERSON: Okay Exhibit A then.
     ADV KENNEDY: As I understand it at the top of the bundle you
     should have the confidentiality agreement that was referred to a little
     earlier in my questioning, is that right?
20   MR BOND: Yes, I do.
     ADV KENNEDY: Then the correspondence, as I understand it, is
     chronologically so although we don’t have page numbers I am afraid
     in what was presented by Wal-Mart we should be able to follow the


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     letters in chronological order. If I can just, I am going to make very
     brief reference to just a few of these letters in the correspondence.
     The first letter following the confidentiality agreement is a letter from
     Doug McMillan he is the head of Wal-Mart International or was at
     the time, not so?
     MR BOND: Yes and he was then and is now.
     ADV KENNEDY: And this is as far back as 1 September 2009 refers
     to being, “continuing to be an exploratory mode in relation to South
     Africa” that is in paragraph 2 and “continuing to build our
10   relationship into a potential successful partnership.” This is where
     the parties were seriously looking to take forward the process of
     tentative discussions, not so?
     MR BOND: Yes and certainly not exclusively with Massmart.
     ADV KENNEDY: Yes, then if I can ask you to turn two pages later,
     in fact the very next page at the foot of the next page. I am sorry my
     colleagues are still at a disadvantage I want to try and sort that out so
     we don’t have more disruptions, may we just have a moment? We
     apparently have not prepared copies of the core bundle, but it is
     available, it is in the documents filed by way of the supplementary
20   discovery by Massmart or at the request or on the order of the
     Tribunal. Right, sorry about that Mr Chair and to the witness. If I can
     take you, we have just had a look at the first letter which was the 1 st
     of September, the next document is a set of e-mails if you can look at


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     the foot of that next page, Friday December the 18th 2009 that is from
     Doug McMillan again to Guy Hayward, he is the senior executive at
     Massmart, not so?
     MR BOND: Sorry, my next mail I am struggling to keep up with you
     myself, so I have got the next insert in my pack is headed from a lady
     Karen Worth.
     ADV KENNEDY: Mr Chair, would it be in order if somebody from
     my team would just sit next to the witness and just to guide him with
     page numbers, if my junior could do that that would help, thank you.
10   After the very first letter in that bundle which was dated the 1 st of
     September there are the e-mails and at the foot of the page is an e-
     mail from McMillan, Doug McMillan.
     MR BOND: On Thursday the 17th of December.
     ADV KENNEDY: That is right.
     MR BOND: Correct.
     ADV KENNEDY: That is addressed to the Massmart people as we
     see at the foot of the page to Hayward and Pattison.
     MR BOND: Yes.
     ADV KENNEDY: At the top of the next page what Mr McMillan is
20   asking Massmart in paragraph 3?
     MR BOND: Sorry just paragraph 3 “Hello Guy” and would...
     ADV KENNEDY: “With the seemingly large opportunities in Africa,
     why the focus on pharmacy and furniture?”


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     MR BOND: Yes.
     ADV KENNEDY: That is as far back as December 2009.
     MR BOND: Yes.
     ADV KENNEDY: There is specific interest not simply to find out
     generally what people are doing in South Africa, but obviously to see
     how attractive this potential bride might be, not so?
     MR BOND: The same would be true of a number of other companies
     at that time.
     ADV KENNEDY: And then the following document, sorry, the e-
10   mail dated the 25th of January 2010.
     MR BOND: Yes.
     ADV KENNEDY: There is an e-mail from...
     MR BOND: Richard Phillips.
     ADV KENNEDY: Richard Phillips, is he one of your colleagues at
     ASDA in the UK?
     MR BOND: Yes indeed.
     ADV KENNEDY: Was he involved also in these discussions looking
     for the possible bride?
     MR BOND: Peripherally in the … Wal-Mart has got a number of
20   people who have been involved in this transaction, certainly Richard
     has been involved in this transaction.
     ADV KENNEDY: Was he writing on your behalf when he engaged
     in correspondence with South Africa?


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     MR BOND: No, Richard has got an M&A background and he was
     sort of a part of the M&A team.
     ADV KENNEDY: Yes.
     MR BOND: Not all information would have gone through me, so
     don’t assume I will have seen any of this stuff.
     ADV KENNEDY: But the point of the contract, which involved, inter
     alia, Richard as well as yourself was potential acquisition, not so?
     MR BOND: Yes.
     ADV KENNEDY: And we see in bullet point 1, the first bullet point
10   “Brian and I” that is Richard Phillips “and Rothschild” Rothschild
     as I understand it is the acquisition advisor to Wal-Mart not so?
     MR BOND: Correct.
     ADV KENNEDY: “Would like to meet you on the afternoon” that is
     23rd of February.
     MR BOND: Right.
     ADV KENNEDY: So you were looking specifically at the possibility
     of acquiring Massmart without having finalised your selection at that
     stage?
     MR BOND: Neither country nor targets, so you know this is an
20   example of an e-mail that you would see from 14, 15 different
     companies.
     ADV KENNEDY: And in the next document 23rd of February comes
     from Chase Tucker at Wal-Mart sent to various people including


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     Phillips, your colleague and refers to attendees for the store visits
     including the vice president of merger and acquisitions Brian Henry,
     not so?
     MR BOND: Yes, it does.
     ADV KENNEDY: And Harper who is the vice president of
     integration is the vice president of asset protection, international real
     estate, etc this is clearly looking at systems and entities within Wal-
     Mart to see whether there was a synergy between Wal-Mart and
     Massmart and to assess the attractiveness of each to the other, not so?
10   MR BOND: Again I can show evidence of similar activity across a
     whole load of companies ongoing always.
     ADV KENNEDY: And then if we can turn some pages later to an e-
     mail dated, from Brian Henry addressed to Guy Hayward dated the
     2nd of April.
     MR BOND: I am sorry, yes go on.
     ADV KENNEDY: This again refers to a note that Doug sent that is
     Doug being the head of Wal-Mart International, not so?
     MR BOND: I would imagine so, yes.
     ADV KENNEDY: And the last paragraph in the text, the second last
20   paragraph starting: “Finally” refers to “happy to see that our
     advisors are staying in close touch” is it fair to say that by this stage
     at least there was regular and frequent interaction between the




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     advisors and officials of Wal-Mart with their corresponding people in
     Massmart?
     MR BOND: No more so than in many of the cases. I need to keep
     characterising that way because certainly it is my interpretation that
     you try and lead us to assume this is exclusive discussions that are not
     the case.
     ADV KENNEDY: I am not saying they were exclusive.
     MR BOND: I am merely clarifying.
     ADV KENNEDY: What I am suggesting to you though Mr Bond,
10   while we are at it is this that while you had other potential brides in
     the queue as the suitor Massmart was most certainly in position
     number one and that there were serious discussions at a very high
     level, right at the most senior levels of Wal-Mart and the most senior
     levels of Massmart in the early part of 2010, not so?
     MR BOND: It is not true that Massmart was the number one
     candidate. I must emphasise once again that it was the outcome of the
     meeting that happened in July with another retailer in another country
     that led to the discussions with Massmart. And I can say no more than
     that, it is obviously highly confidential but it is absolutely not true to
20   characterise Massmart as the primary target at all prior to a couple of
     weeks before the meeting in September.
     ADV KENNEDY: Despite the fact that some of the documentation
     indicates otherwise?


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     MR BOND: I don’t feel it does.
     ADV KENNEDY: The Wal-Mart document it said that it was the
     exclusive target...
     MR BOND: In South Africa.
     ADV KENNEDY: In June 2010.
     MR BOND: In the South African...
     ADV KENNEDY: For the South African project, but that is all we
     are talking about Mr Bond.
     MR BOND: I am...
10   ADV KENNEDY: I understand that there were potential acquisitions
     in other parts of the world. We are talking about the South African
     acquisition...
     MR BOND: Forgive me if I am not helping clarify this. First of all
     however large the perception is of Wal-Mart, Wal-Mart has a limited
     CAPSOL allocation so there will be tradeoffs between different
     projects, so it will be wrong to assume that if we are buying X here
     we can still buy Y there, so there will be a trade off first of all
     between different country projects and then there will be trade off
     within countries. I am referring to the fact that Massmart was not the
20   primary target for Wal-Mart’s acquisitions...
     ADV KENNEDY: Internationally?
     MR BOND: Internationally.
     ADV KENNEDY: I accept that.


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     MR BOND: Right.
     ADV KENNEDY: We are really not quarrelling about that I assure
     you.
     MR BOND: Okay.
     ADV KENNEDY: If I can ask for my junior to assist to find the next
     document, which is at the top of the page referred to as Karen Worth
     from Guy Hayward sent on the 20th of April 2010.
     MR BOND: Yes, I have got it.
     ADV KENNEDY: And what I am interested in is the second e-mail
10   that appears halfway down from Brian Henry at Wal-Mart legal. In
     fact Brian Henry as his title underneath his name near the bottom of
     the page, he is the vice president of Wal-Mart for mergers and
     acquisitions correct?
     MR BOND: Yes.
     ADV KENNEDY: That is why he is president to Wal-Mart
     International?
     MR BOND: Correct.
     ADV KENNEDY: And that e-mail, which was sent on the 15th of
     April 2010, is of particular interest to my clients, the unions that we
20   represent. Mr Henry says, addressing this to Mr Hayward of
     Massmart: “As I mentioned it would be helpful to know the
     percentage of organised labour in the stores by division if possible.
     Also does Massmart operate under one or more CBAs” collective


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     bargaining agreements I assume “with the union or unions. If you
     could let us know how many and with which unions and when they
     expire that would also be helpful. We look forward to the DB reports
     as well.” What is DB?
     MR BOND: I am not sure.
     ADV KENNEDY: Okay, well let’s look at the portion that does
     interest me. At the level of vice president of mergers and acquisitions
     for Wal-Mart when you are simply looking at the possibility of a
     South African project and a possibility of acquiring Massmart as well
10   as the possibility of acquiring other targets, in South Africa, potential
     targets, why at this early stage in your own timetable in April 2010 is
     there now discussion about union recognition in the stores of
     Massmart, what the collective bargaining agreements are and when
     they expire?
     MR BOND: It is a perfectly normal question asked not only by Wal-
     Mart wherever it wants to go, but as I reiterated I now work for the
     companies and the other companies would ask exactly the same
     question of any number of companies, so I don’t see that as unusual at
     all.
20   ADV KENNEDY: And why is this typical and relevant issue to be
     raised to...




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     MR BOND: As a responsible employer one wants to understand the
     arrangements between yourself and your associates this is not unique
     to Wal-Mart. I worked for...
     ADV KENNEDY: I asked you why?
     MR BOND: Why, because you want to understand the arrangements
     between the management...
     ADV      KENNEDY:              Why do            you      want       to     understand     the
     arrangements?
     MR BOND: Why is...
10   ADV KENNEDY: Is it so difficult to simply answer...
     MR BOND: You want to understand the characteristics of the
     relationships. It is like asking what is your labour turnover...
     ADV KENNEDY: You want to understand because you want to
     understand?
     MR BOND: Yes.
     ADV KENNEDY: I put it to you that in fact the attempt by both Mr
     Pattison and you to suggest well it is going to be business as usual in
     relation to the relationship between management and the union and
     their workers in South African operations is, with respect, stretching
20   credulity a little too far.
     MR BOND: That is merely your assertion. I disagree.
     ADV KENNEDY: You deny that? I see. And then if I can ask you
     and your assistant there two pages later.


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     [Talking simultaneously]
     MR BOND: I closed the book, forgive me.
     ADV KENNEDY: Three pages later, to look at the e-mail from, again
     from Brian Henry again to Guy Hayward.
     MR BOND: So what date?
     ADV KENNEDY: That is the 10th of May.
     MR BOND: The 10th of May.
     ADV KENNEDY: I would like to look at the one at the top of the
     page “Monday’s agenda is confirmed. The concern centres around
10   the media rather than associates. As you will have noticed
     speculation has recently picked up outside of South Africa.” And then
     at the foot of the page there is an earlier e-mail sent a bit earlier the
     same day where the same Mr Henry says “I hope all is well? In
     reference to next week there is a fair bit of concern here about the
     recent focus on Massmart in the media. While we are comfortable
     with proceeding with the visit with Mike and Doug, we would prefer
     to cancel the Mexico portion of the itinerary. Given that your
     executive regularly visits the University here” that we understand to
     be Walton University in the United States, not so?
20   MR BOND: I think it is the Walton, forgive me, I am not sure of the
     detail but it certainly isn’t something called the Walton University.
     ADV KENNEDY: Yes, but it was sponsored, I believe by Mr
     Walton, the founder of Wal-Mart?


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     MR BOND: I am sure you are right.
     ADV KENNEDY: There is sufficient pretext for your visit to
     Bentonville. And then the UK visits, the second paragraph “The UK
     visit is also fine. Although we will reduce the store visits to a
     minimum as Andy” that is yourself “does draw a fair bit of attention
     from our associates” associates what employees?
     MR BOND: Yes.
     ADV KENNEDY: Yes.
     MR BOND: I have my small fan club.
10   ADV KENNEDY: I beg your pardon?
     MR BOND: Sorry, go on.
     ADV KENNEDY: Mr Bond, it is just curious for us that there seems
     to be a bit of spin doctoring going on here, specifically to avoid
     speculation about visits as recent as May 2010, where there has been
     considerable discussion between the parties. Not final agreement I
     accept.
     MR BOND: Look again let me try and help here. First of all to
     reiterate the point, we were talking to a number of companies in a
     number of markets, some here some elsewhere the content of this is
20   with regard to the fact that as I remember there was speculation
     apportioned to the chief executive of another South African retailer
     who was speculating on who was Wal-Mart’s target. Now the reason
     for that for me speculating is to smoke out who the real target of Wal-


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     Mart’s interest was. What happened as a consequence is a run on the
     Massmart share price, which is the content of this that is why this
     correspondence happened.
     ADV KENNEDY: Again you will appreciate, I trust, that this once
     again gives rise to concern on the part of our clients. And if you bear
     in mind too that the first indication that was given to the union,
     despite denials to the contrary earlier, the first indication given to the
     union that a merger was being explored was when it was actually
     announced as having been agreed to by the parties in September 2010
10   by way of a SMS?
     MR BOND: All I can do is say look I have sworn on an oath that I
     will tell the truth. I didn’t know we were going to approach Massmart
     as a primary target until about three days before we did, so I don’t
     know how anyone else can and we weren’t, bear with me, we were
     not considering them as a primary target until after a series of
     meetings had already identified and the decision was made in early
     September. I don’t know the exact date, but that is the truth.
     ADV KENNEDY: Well I accept that the deal was finalised that late.
     What we don’t accept is that you were … that you had decided to
20   approach Massmart with a view to a potential transaction only that
     late that was the end not the beginning of the process.
     MR BOND: I think the thing that we disagree on is the nature in
     which you negotiate a transaction. There is absolutely no way that we


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     were going to define Massmart in any way, because we haven’t made
     the decision of the primary target, the decision was made after a series
     of meetings were already identified.
     ADV KENNEDY: I am talking about the process that preceded not
     followed the decision to actually enter into the transaction.
     MR BOND: All I can say is if we are sitting here talking about an
     acquisition between Wal-Mart and another South African retailer you
     would be able to expose similar documentation.
     ADV KENNEDY: Now if Wal-Mart allows potential acquisitions to
10   continue with good relationships with unions and where they wish to
     encourage rather than undermine those relationships does it not strike
     you as an outsider who also prides himself on employee and union
     relations in the UK and elsewhere within the group? Is it not a bit
     troubling to you that there was such late revelation to the union and
     no meaningful discussion with the union about this possibility, this
     possibility of a merger prior to the rest of the world knowing when
     the media published it in late September 2010?
     MR BOND: I obviously can’t comment either positively or
     negatively on the detail of the morning of the Monday following the
20   discussions in London on the Friday or the Saturday, but what I can
     say is I absolutely would have done the same thing in Grant’s
     position, because he had no knowledge of any, even potential
     transaction and remember as Grant said yesterday it was the start of


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     the transactional process that weekend. He couldn’t possibly have
     discussed anything with anyone until he got back from London and
     he tried to, as soon as possible, I can’t comment how hard he tried,
     but I can comment I would have not attempted to address any outside
     stakeholder until he had got the support of his board.
     ADV KENNEDY: If I can take you to the next document please Mr
     Bond that is again an e-mail from Brian Henry to Mr Pattison dated
     13th of May 2010, do you see that at the top?
     MR BOND: Yes.
10   ADV KENNEDY: If I can take you to the one near the bottom,
     halfway down, it is the one dated the 12th of May.
     MR BOND: I have got that, yes.
     ADV KENNEDY: Now that is a reference, this is at the time of the
     meetings or setting up the meetings that were going to take place,
     both in Bentonville and in the UK and Brian says: “We anticipate
     that we will be able to take you” that is Grant “to a perishables DC”
     that is a distribution centre “on Tuesday. Mitch can speak to the real
     estate approval process. He will have dinner with you etc. We have
     an SVP of ISD scheduled to participate in a group lunch on Monday.
20   She will be able to give you more insight to IT services.” SVP refers
     to what senior vice president?
     MR BOND: Senior vice president.
     ADV KENNEDY: ISD?


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     MR BOND: Information systems division.
     ADV KENNEDY: So effectively it is IT services as he refers to a
     couple of lines down.
     MR BOND: Yes.
     ADV KENNEDY: But as early as May 2010 what is already being
     talked about is not just the possibility of Massmart as being a
     potential bride. What you are really talking about is how if that
     possibility is transformed into reality, how integration would take
     place, not so?
10   MR BOND: No, I mean it is part of the courtship process. And again
     this was happening with a number of companies at this time, not so
     exclusively with Massmart and not in any way to suggest there would
     be a transaction. This is a courtship process to get to know each other.
     ADV KENNEDY: Then if I can ask your so called associate to turn
     later past the itineraries to an e-mail from yourself Andy Bond to
     Grant Pattison dated the 1st of June 2010. “The subject is much
     appreciated” do you see that?
     MR BOND: Hold on a second please.
     ADV KENNEDY: I am sorry.
20   MR BOND: Yes, I have got that.
     ADV KENNEDY: And you say “Much appreciated great to see you
     too” that is in response to Grant Pattison’s e-mail to you at the foot of
     the text there.


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     MR BOND: Yes.
     ADV KENNEDY: The 1st of June.
     MR BOND: Yes.
     ADV KENNEDY: Then he says: “Andy I just want to convey my
     thanks to you and your team for the look under the bonnet at ASDA.
     You no doubt have built a great team there. We can only help to
     emulate that. We appreciate that all your insights of being part of the
     Wal-Mart family.” I put it to you that this is reflective of an ever
     closer relationship between the teams with a view to finalising the
10   negotiation of a merger deal.
     MR BOND: There is replicate e-mail between myself and the chief
     executive, another South African retailer following a meeting I’ve
     already referred to in June.
     ADV KENNEDY: But they were further down in the list, not so?
     MR BOND: They were on the list.
     ADV KENNEDY: On the list, further down on the list. We’ve
     established that.
     MR BOND: No, not necessarily at that stage. You refer
     chronologically to a different date.
20   ADV KENNEDY: Can I take you to the very next document, which
     is 1st of June, again from Mr Henry to Mr Pattison? In the second
     paragraph there is a reference to you, Andy “and I will be visiting SA
     again the last week in June along with another international


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     executive. One of our stops will be Durban. It will be very helpful to
     take a closer look at your distribution centres, DCs and the
     Cambridge stores. Any assistance your guy might be able to provide
     on this front would be greatly appreciated”.
           I put it to you again, Mr Bond, that this is illustrative of a very
     close an intense process of engagement with a view to finalising a
     transaction.
     MR BOND: I think it mainly reinforces that we highly scrutinise the
     opportunities, of which this was one of many at the time.
10   ADV KENNEDY: And if I can take you to an e-mail a few pages
     later, it bears the name at the top Karen Worth, but it comes from
     Grant Pattison, the 25th of September 2010. This is approximately the
     date of the media announcement, not so?
     MR BOND: Bear with us please. We are trying to find it.
     ADV KENNEDY: I beg your pardon.
     MR BOND: Yes, I’ve got that.
     ADV KENNEDY: That’s round about, I think it was on the day or or
     the day before the media announcement, not so?
     MR BOND: I think it would be useful if we remember the exact date.
20   It certainly was on or around it.
     ADV KENNEDY: Yes.
     MR BOND: What day of the week was the 25th?




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     ADV KENNEDY: Yes, I don’t think anything turns on it, fortunately,
     for either of us, Mr Bond.
     MR BOND: Alright.
     ADV KENNEDY: So, we won’t need to debate that. Here Mr
     Pattison is replying to you personally. It is addressed to you
     primarily. “As discussed, some brief thoughts about the unions.
     Firstly, know their politics. I attach a pdf of their latest thinking. A
     search of foreign will direct you to their thinking on foreign
     ownership. Just note they have little support for these positions within
10   the ANC or government. We will need to consider our response to the
     following demands: Commitment for a period to no retrenchments;
     commitment to continue to honour the recognition agreements in the
     unions’ favour; not test their representation level; commitment to
     employment equity; the principles of transformation stand firmly
     opposed to agency shop and industry bargaining council and
     continue to demand increased labour flexibility on working hours”.
           I suggest that this is illustrative of an attitude on the part of
     Massmart trying to confirm to you and impress you at the side of
     Wal-Mart that Massmart is going to be standing firm on various
20   principles, which are not exactly sympathetic to the union.
     MR BOND: I read this as a document between two chief executives
     trying to manage what is an important issue in the transaction. No one




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     refutes union movement and the unions are important in South Africa
     and the mere fact we are on this conversation now demonstrates that.
     ADV KENNEDY: What is of interest is that he is raising with you as
     far back as round about the time of the media announcement that you
     are going to have to take a position as to possible commitment in
     relation to these issues. He already shows a clear assurance that he is
     going to stand firmly opposed to such issues as agency shop and
     industry bargaining council and to demand increased labour
     flexibility on working hours. I put it to you, Mr Bond, that we’ve had
10   no commitments that are meaningful and enforceable to provide some
     measure of assurance or comfort to the unions, even as you sit there
     today in the witness box.
     MR BOND: You are right. You haven’t and to the point that what I
     would know is it demonstrates the philosophy I was referring to. This
     is the chief executive of potential Wal-Mart business, reinforcing with
     a guy who we thought at the time might be supervised at how he
     wanted to handle the situation. He wasn’t telling me to give him my
     advice and say what’s the Wal-Mart policy? This is a demonstration
     of the fact that we respect the chief executive of a company doing
20   what is right for his business locally.
     ADV KENNEDY:                  But it doesn’t address                     and subsequent
     communications have not addressed, even today, our expectation that
     there would be firm binding commitments. On the contrary, the only


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     thing that is shown is firm is firm opposition to some of the points
     that would favour the unions, such as agency shop and industry wide
     bargaining council where there would be industry wide sectoral
     bargaining collectively of wages and also a continued demand to the
     union that they must have increased flexibility as labour on working
     hours, which just happens coincidentally, is it, to coincide with
     exactly Wal-Mart, one of Wal-Mart’s approaches to employees and
     handling employees.
     MR BOND: You are not going to get a different answer out of me.
10   We’ve talked about this a number of times. Using the terminology
     yesterday, you are fencing me. We’ve asked the same question a
     number of times. My answer is that we respect the leadership of Grant
     locally. We respect the rule of law, but also the culture of this
     country. Grant would do what’s best for his business and we respect
     the fact that he is a South African running a South African business. I
     will support him in doing what is right.
     ADV KENNEDY: Why was there even communication between him
     and you on this day?
     MR BOND: I’ve already answered that question.
20   ADV KENNEDY: You have nothing further to add.
     MR BOND: I have nothing. No, I haven’t got anything else to add.
     ADV KENNEDY: Mr Chair, I’m about to get into another section of
     the cross-examination. I’m getting fairly close to the end of the time


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     that we’ve agreed with our colleagues, but I won’t finish it before you
     take the normal lunch adjournment. Would this be a convenient time
     to take it?
     CHAIRPERSON: I think let’s come back a little earlier then. Perhaps
     we can come back at say quarter to two. Thanks.


                                      Adjournment
     On resumption:
     CHAIRPERSON: Mr Kennedy?
10   ADV KENNEDY: Mr Chair we just have a few more questions. Mr
     Bond we’ve discussed at some length the stages during 2010 when
     there were discussions between the parties and you were at pains to
     point out that you hadn’t selected a marriage partner until just shortly
     before the media announcement in September 2010, if we can be
     forgiven to perpetuating the same analogy with suitors and brides and
     so forth, which may be a little out of date and perhaps patronising.
            Can I put it to you that at least … would you be prepared to
     accept at least this, that during the course of the bulk of 2010 in the
     many months leading up to September 2010, while you were looking
20   at a potential marriage in South Africa, and you were looking at
     potential suitors of whom Massmart was at least important, that on
     the side of Massmart it was trying to position itself to look impressive




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     to Wal-Mart and to structure its own affairs in a way which would
     accord with the broad Wal-Mart approach. Would that be fair to say?
     MR BOND: No it wouldn’t. Furthermore I refer to the redress from
     our lawyer earlier that even if it was trying to put lipstick on itself
     then putting itself in a position of retrenching 503 people in a highly
     unionised environment would not be putting lipstick on.
     ADV KENNEDY: You see one of the documents that have been
     produced by your own team, in fact reveals that in discussing the
     restructuring, which led to the retrenchment of 500 odd people,
10   Massmart was in fact restructuring through processes that borrowed
     from the Wal-Mart approach of improved techniques and improved
     structures, improved engineering of businesses.
     MR BOND: Sorry can you refer me to that?
     ADV KENNEDY: No, I don’t have the document at my fingertips. It
     just seems to me that this was again, not a mere coincidence, but in
     fact a manoeuvring by Massmart to make itself the most attractive
     target.
     MR BOND: I’m not at all familiar … I’m not questioning that you’re
     referring to facts. I think as Mr Pattison said yesterday, I know I used
20   some of my own examples, that’s just the nature of world class
     business. ASDA will emulate a lot of best practice from Tesco’s, does
     that mean that we are preparing ourselves to be acquired by Tesco’s?
     No it doesn’t. That’s just the nature of good quality business.


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     ADV KENNEDY: Now in conclusion I just want to take you back to
     the issue of the ability to ensure suppliers comply with proper
     practices. And I’ve referred you to the Jane Doe case, which
     obviously we’ll make available to your legal team if they don’t have
     it already. I’m told they do. One of the things that was decided in that
     case, Mr Bond, was that the provision in the agreements between
     Wal-Mart and its suppliers, that you’ve in fact referred to in your
     statement, to enforce standards on suppliers have no legal force or
     remedy other than to terminate the agreement itself. And I put it to
10   you Mr Bond that this is one of the many reasons why it is
     appropriate that if the transaction is to be approved by this Tribunal at
     all, appropriate conditions have to be imposed to ensure that the
     public interest is protected.
     MR BOND: Sorry, can you repeat. I’m struggling to hear some of it,
     because the noise out there, so do you mind repeating the point?
     ADV KENNEDY: Yes, it is a bit distracting. Some of our clients feel
     quite passionate about this issue.
     MR BOND: I’m sure they do.
     ADV KENNEDY: I put it to you that where in fact you have given
20   assurances and said that there are mechanisms available within the
     Wal-Mart standard operations across the world inter alia to ensure
     that the interest of workers of suppliers are protected, that they’re not
     enforceable to the benefit of workers. And that this is one of the


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     illustrations of why it is so important that appropriate conditions be
     imposed if this transaction is to be approved at all.
     MR BOND: I’m not sure I fully understand the question, forgive me,
     it might be that I’m dumb, but I mean what I would say on the subject
     of supply is that all of the practices that you referred to and not just
     internal practices, but the benchmark against recognised global supply
     chain standards whether be in the UK, the ethical trading initiative or
     in the US similar standards. So these do apply and are consistent with
     best practices of all retailers across the world. So I’m not quite sure I
10   understand your point.
     ADV KENNEDY: And then you heard yesterday Mr Bond the debate
     between me and Mr Pattison as to job creation and the indication that
     Massmart, if it merges with Wal-Mart will increase, not reduce job
     opportunities for people. Will increase, not reduce job security of
     existing and future employees. If I can take to you to your own
     witness statement, paragraph 60, page 29.
     MR BOND: Yes I’m with you.
     ADV KENNEDY: What you say there in rather guarded terms is this
     “it’s premature to predict with any degree of certainty the degree to
20   which the implementation of the proposed transaction will translate
     into actual job creation in South Africa. However, Wal-Mart’s
     aforementioned track record coupled with Massmart’s stated
     intention to expand within the South African retail market is


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     anticipated to have a positive impact on job creation in South
     Africa.” Would you agree with me that that’s pretty guarded terms in
     relation to this issue? I can understand why, but you’re cautious.
     MR BOND: Yes, I mean I will just explain the context. I mean first of
     all, I guess our track record is very important in this context. It’s my
     submission … evidence is that in every market that we’ve entered
     we’ve created jobs through growth. We’re a business that drives sales
     growth. The reason why we’re guarded is the fact that we have no
     absolute certainty and it’s not within our control as to the pace at
10   which we can open new stores, which is one of the major drivers of
     growth. But is it within our own documentation to evidence that we
     believe we can grow the Massmart business even more quickly than
     the Massmart team do, yes it is? So do I have confidence we can do it,
     yes? Could I give anyone a guarantee, no I can’t, because it’s not
     within our control.
     ADV KENNEDY: Well no doubt Mr Bhana in terms of the division
     of topics and time is going to deal in a moment with you concerning
     the extent of imports and the effect of the Wal-Mart operations on
     imports and the effect that that may have in relation to South Africa.
20   From a job point of view, one of the primary areas of our clients focus
     for the various unions we represent, it specifically relates to that issue.
     And if we are right and if the expert that has given a report to this
     Tribunal on behalf of the departments is right, and if there is indeed


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     justification for concern that there will be substantial increases in
     imports that will inevitably have a major effect on jobs in South
     Africa, likewise increase in Massmart operations may have the effect
     that its opposition, its opponent retailers may suffer and jobs there
     may suffer, you cannot offer anything by way of undertakings or
     proposed conditions other than what you’ve said already, is that right,
     to try and address those concerns?
     MR BOND: I want to address one of the points you’ve raised there
     and it was raised yesterday. It is a fallacy to assume that retail growth
10   is a zero sin game. You live here in an economy that’s ripe for great
     growth, consumer spending, consumer household incomes will
     increase dramatically, you look across the world, one of our examples
     that we use is Chile but there’s many. As GDP grows the pie grows
     with it. It’s not a zero sin game where as Massmart grows other
     decline. We will grow ahead of the market, so we will gain share, but
     everyone will grow. That’s the nature of developing economies. And
     I think that’s massively misunderstood or misrepresented by your
     perspective.
     ADV KENNEDY: But no undertakings or proposed conditions to
20   address the concerns? Your answer, as I understand it is, don’t worry
     you’ve got no reason to be concerned?
     MR BOND: They’re not necessary in any concerns or commitments
     with regard to the union position, back to what I was saying earlier, I


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     support the perspective that Mr Pattison gave yesterday. So there is
     no new news in my statement now and I’ve repeated it four times.
     ADV KENNEDY: Well I put it to you Mr Bond that if you felt it
     wasn’t necessary and because the business is going to grow
     substantially in the future and you’re so confident about GDP growth
     and the business growth and so forth in the future, there should be no
     reason not to make a firm enforceable, binding commitment in
     relation to the issues that we have raised concerning job security,
     concerning relations with unions and the like.
10   MR BOND: That’s your perspective.
     ADV KENNEDY: Thank you, we have no further questions Chair.
     CHAIRPERSON: Mr Bhana.
     ADV BHANA: Thank you Chair. Mr Bond let’s start with exploring
     the following, is the merger and the Wal-Mart association going to
     deliver savings for consumers or not?
     MR BOND: We are highly confident that we will be able to lower
     price and deliver those benefits to the consumers, as our submission
     says and as our practical evidence across the world as we enter
     markets in growth.
20   ADV BHANA: So your evidence will be that there will be an actual
     lowering of prices rather than simply a perception that because of the
     Wal-Mart association, the new entity is going to be cheaper than
     anyone else?


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     MR BOND: Yes.
     ADV BHANA: And as a rough projection across the board, can you
     give us a guideline as to what you envisage that cost saving to be to
     the consumer, 10 to 15% fair?
     MR BOND: I have no idea.
     ADV BHANA: So you simply hold out this promise to the South
     African public that we will lower prices, without any idea whether
     that’s going to be a significant lowering of prices and tied to that,
     whether what you say is going to be an actual lowering, will in fact be
10   an actual lowering.
     MR BOND: I’m very confident we can lower prices. I’m not sure of
     the degree because it’s something that happens as a virtual circle. For
     your later discussion about sourcing, it’s very important that I
     position what the Wal-Mart business philosophy is. We are a low
     price retailer…
     ADV BHANA: No, no, let me deal with the question.
     MR BOND: Could I finish?
     ADV BHANA: No. Let me deal with the questions I want to put to
     you. You’ve had ample opportunity to set out the philosophy and
20   everything else…
     ADV GAUNTLETT: Chair, with respect the witness is answering the
     question.
     CHAIRPERSON: I think let him finish his answer please.


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     MR BOND: I think this is … and the reason it is … thank you Mr
     Chair. I think it’s very important because it’s fundamental to
     answering your other questions. So I think it’s important we get this
     on record now. You’ve heard, most of you, not all if you, about a
     business philosophy being about EDLP everyday low price. This is
     both a supply chain strategy which you will refer to later, but it’s also
     a consumer pricing strategy.
            Our pricing strategy is based on a fundamental believe that
     we’ve got a brand that is price elastic. So as we lower prices, we drive
10   volume more than we lower prices. And that creates an engine for
     growth, you lower prices you drive volume, you lower your costs,
     you invest that cost saving back in your prices and it becomes a
     virtual circle. It’s an ongoing perpetual obsession, we’re lowering
     prices for consumers. Can I say how much that will affect … how
     long it would take, I can’t, but what I can say and the evidence across
     the world is our obsession and what we’ve done in every market
     we’ve gone to is lower prices and allow underserved people to start
     enjoying a better lifestyle based on them giving them access to lower
     price goods. I can’t commit to how much, but I can tell what you we
20   did.
     ADV BHANA: In your experience across the world what has your
     experience been? What is your experience in Chile in terms of benefit
     to the consumer and of course, this is a rough and ready indication


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     and of course it will differ in categories or products, but on average,
     what has the benefit been to the Chilean consumer?
     MR BOND: I don’t have the detail, but you may have chance to ask
     the other witness who is the chief executive.
     ADV BHANA: What has the benefit been to the UK consumer with
     your association with ASDA?
     MR BOND: Over the timeframe that Wal-Mart has owned ASDA,
     real retail prices have dropped in real terms by 15%. And we have
     dropped prices by 20% over that same timeframe.
10   ADV BHANA: Alright, so as a rough and ready guide, my postulate
     of 10 to 15% would be quite conservative if one were to take the UK
     example?
     MR BOND: Well it would, but it’s purely hypothetical.
     ADV BHANA: You don’t have anything better to offer, despite the
     extensive due diligence and one of the aspects of the decision being
     that you will be able to lower prices and extract value, you can’t offer
     anything better?
     MR BOND: I can’t because it’s an ongoing process. You articulate it
     as if it’s an one off impact, that’s not the way our business works.
20   ADV BHANA: Now where is that benefit going to come from?
     You’ve said to me it’s not just supply chain anticipating my question,
     but you accept that a substantial part of that benefit is going to be
     from the supply chain?


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     MR BOND: I do submit that a lot of it will come from the supply
     chain. What I don’t submit is a lot of it will come from changing the
     places, items purchased and it won’t necessarily change the price at
     which things enter the supply chain using Mr Pattison’s term. We will
     have some impact, but not a lot of impact on the factory gate price.
     ADV BHANA: Mr Bond let’s just establish a few rules, every
     question I’ve asked you has extracted a long garrulous answer from
     you. Please answer directly and don’t anticipate where I’m heading to
     or what the next question will be, or what you’re trying to prove in a
10   non-responsive answer. Can you limit yourself to what I’m going to
     ask you?
     MR BOND: Can you help me by describing what garrulous means
     please?
     ADV BHANA: No. A substantial part of that benefit is going to come
     from the supply chain?
     MR BOND: Correct.
     ADV BHANA: Sourcing is going to be a substantial part of that
     supply chain benefit?
     MR BOND: No.
20   ADV BHANA: Why not?
     MR BOND: I will refer you to the Genesis report which identifies
     where we have identified synergies and that identifies significantly
     less than 10% of our total synergies will come from direct imports.


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     The vast majority will come from, and I’m willing to explain that if
     you would like the long rather than the short answer, the whole way
     we manage our supply chain.
     ADV BHANA: We’ll explore that in due course. So you say from
     your point of view of this, let’s take the hypothetical, 15% consumer
     benefit, 10% a portion of that only is likely to be as a result of your
     sourcing functions?
     MR BOND: The cost of the goods as they leave the factory will not
     necessarily significantly reduce and certainly we will not change the
10   location at which things are made. If you’ll allow me the chance I’ll
     try and explain what the overall vision of how the supply chain will
     work, because that may answer a lot of your further questions. Will
     you allow me to do that?
     ADV BHANA: I’m reluctant to because I think you’re just going to
     pre-empt things that I may not ask you to explain. So unless you
     believe it’s absolutely critical and the Tribunal is prepared to allow
     you to do that, I don’t want you to do so.
     MR BOND: Well Mr Chair would you allow me to explain the way
     the Wal-Mart supply chain structure works, I think it’s fundamental to
20   understanding how we do business?
     CHAIRPERSON: Go ahead.
     MR BOND: The first thing to say is I’ve worked for ASDA prior to
     being part of Wal-Mart and when it was part of Wal-Mart and the fact


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     is that the goods we bought were not at any lower cost or not
     significantly lower costs as part of Wal-Mart than when we were on
     our own. There’s this misconception that big means you buy cheaper.
     What Wal-Mart does offer is know how, both intellectual property
     and systems capability to make sure we can transport goods and
     forecast the demand of goods at the lowest possible … more
     accurately to reduce waste and improve efficiency in the whole
     supply chain.
           So this links back to the point about EDLP, this is fundamental
10   EDLP is about offering the lowest price everyday so consumer
     demand is the same every day. Consumer demand is the same every
     day, you can forecast your demand more accurately, you can tell
     you’re vend is more accurately, they can produce more accurately and
     so everyone wins. Production is lower, shipment is lower cost, you
     receive goods more cheaply, you can organise your labour better so
     the whole supply chain is run at a lower cost, which allows you,
     forgive me for making a bit more money by passing the majority onto
     consumers. That’s the fundamental principle of EDLP and Wal-
     Mart’s supply chain strategy.
20         It’s not about eating supplies up to get cheaper prices, it’s about
     working with them and working with the supply chain to make it the
     most efficient it can and adopting systems and disciplines, which are




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     world class, which is exactly what Massmart will get when it
     becomes part of the Wal-Mart family.
     ADV BHANA: You see Mr Bond the difficulty we have with your
     witness statement and your evidence is you simply protest too much.
     Is it your evidence that these substantial benefits to consumers,
     substantial savings that you’re going to pass on is going to come
     principally from the more efficient management of the supply chain
     as opposed to any aspect of procurement?
     MR BOND: Both, but it’s not in any way … both. Both domestically
10   and globally.
     ADV BHANA: When you both what are you referring to?
     MR BOND: Primarily when we deal with the suppliers and they can
     produce things at a slightly lower cost they will pass that on, but
     there’s no evidence, certainly in our submission, there’s no evidence
     from my experience that that’s where the majority savings will come.
     Less than 10% of our identified synergies, which have been
     published, which is part of our submission, come from cost savings in
     that manner. The vast majority would come from flowing goods in a
     more efficient manner between supplies and our business and within
20   our business.
     ADV BHANA: Well you know you roll a few different responses
     into that answer. Do you accept that sourcing is going to be a




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     substantial feature of that cost saving or not? Let’s take one
     proposition at a time.
     MR BOND: Help me understand and forgive me because we’re in
     danger of frustrating each of those, can you help me understand what
     your definition of sourcing is please?
     ADV BHANA: Using your size and your know how to procure at
     better prices.
     MR BOND: At factory gates?
     ADV BHANA: Yes.
10   MR BOND: There will be some, but it’s the $40 million in their
     present value, that are submitted in the Genesis report.
     ADV BHANA: Now what is the … you’re referring to the Genesis
     report, but you refer to the synergies document is that the document
     that is to be found … can you turn in those blue volumes to page 892,
     it might be in volume 2?
     MR BOND: Do you know which one it’s in, is it in volume 2?
     ADV BHANA: I think it is. We’ll help you find it in a minute.
     MR BOND: Can you repeat the page number again please?
     ADV BHANA: 892.
20   MR BOND: Thank you very much. Okay I have that.
     ADV BHANA: You refer to a 10% in cost saving will come from
     imports, is that what you were referring to? Did I understand you
     evidence?


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     MR BOND: Yes, I’m referring … I genuinely don’t know how this
     document cross-references with the Genesis report.
     ADV BHANA: No, forgetting what Genesis says, what do you say as
     Wal-Mart?
     MR BOND: What I’m saying…
     ADV BHANA: Let me finish the question.
     MR BOND: Sorry.
     ADV BHANA: How much of the cost saving is going to come about
     as a result of sourcing?
10   MR BOND: We have identified a number of synergies which we
     believe that we can mutually benefit Massmart. And the number is
     not … I’m not sure how much of this is confidential, but it’s not. Of
     that number less than 10% comes from direct import savings.
     ADV BHANA: Now what is your source for that and you keep
     paging through a document, I’m not sure what it is?
     MR BOND: Well this is just my reference on how we built up the
     numbers that are then submitted into the report.
     ADV BHANA: Where is it to be found in the discovery?
     MR BOND: I’m not sure it needs to be does it?
20   ADV BHANA: You certainly won’t have any difficulty making that
     available, because as I understand that is your analysis of the
     synergies document?
     MR BOND: That is the detail behind the synergies.


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     ADV BHANA: That’s indeed. In fact it’s one of the aspects I was
     going to come to, that there’s got to be a furthermore detailed
     document underlining this. Is that the document that you’ve got or is
     it that plus something else?
     MR BOND: This is a legal question as to whether … certainly Mr
     Bhana I’m going to have refer to my legal team.
     ADV BHANA: Sorry, just listen to the question. Is the detail that
     goes into the synergies document solely to be found in the document
     that you have or is it to be found in that document together with other
10   documents?
     MR BOND: This is some detail on some of the lines that I’ve got. I
     don’t know where the other detail is.
     ADV BHANA: Unfortunately we were not favoured with that, so I’m
     going to ask that you allow us at a convenient point to take a copy of
     that to examine and see what flows from that.
     MR BOND: Okay.
     ADV BHANA: But based on what you have in that document, you
     say there’s detail there which shows that less than 10% of the benefits
     will come from direct … is it 10% or less than 10%?
20   MR BOND: I don’t have a calculator in front of me, but it’s less than
     10%.
     ADV BHANA: How do you calculate it? What are you referring to in
     that document?


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     MR BOND: I’m referring to the numbers that are in the Genesis
     report, which identifies our synergies line-by-line.
     ADV BHANA: No, no I’m asking you with regard to your document
     what are you referring to?
     MR BOND: I’m referring to the detail of how we built up our
     estimate of the $40 million.
     ADV BHANA: Give me the line items that you add up to get to the
     10%?
     MR BOND: Again it’s significantly less than 10%, but the detail of
10   that is around … I mean it comes back to the point that was made
     yesterday, it’s identifying items that we feel are already sourced
     globally that we can buy at a low price.
     ADV BHANA: Please just read the line items from the document.
     MR BOND: It’s an estimate of margin benefit of identifying items by
     division that we think we can source at a lower price. It’s not … it’s
     substituting existing globally sourced items for our supply chain.
     ADV BHANA: How do you identify those items?
     MR BOND: We haven’t, they’re estimates.
     ADV BHANA: No, no, how do you identify the items?
20   MR BOND: We haven’t. It’s an estimate. It’s the methodology we
     use. We estimate based on a generic understanding where we think
     we can get benefits. There is no further detail behind that.
     ADV BHANA: Where does that generic understanding come from?


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     MR BOND: From our knowledge and expertise in walk-in stores.
     ADV BHANA: So you walk a store, for example, in the UK and that
     gives you an idea as to what your benefit would be in terms of better
     sourcing in South Africa?
     MR BOND: No. It comes from all of the work that we’ve done and
     identifying opportunities over the last number of months. That is
     purely an estimate and one thing I can guarantee is it will be … it’s an
     estimate. It’s not a detailed number.
     ADV BHANA: You’re exceptionally evasive. Is it as a result of
10   walking the stores, as you suggested, or has there been a further
     study, because you in the same breath refer to all of the work we’ve
     done over the last number of months? Now what work is that?
     MR BOND: I was merely referring to the fact that we’ve spent time
     walking stores and understanding the general nature of the business.
     Has a detailed study been done line-by-line? No it hasn’t.
     ADV BHANA: You walked stores in South Africa?
     MR BOND: Correct.
     ADV BHANA: Ah, so you walked stores in South Africa, understood
     the general nature of the business and formed a view as to what you
20   could shave off prices by better sourcing?
     MR BOND: That’s a very good summary, thank you.
     ADV BHANA: And who was involved in that exercise?
     MR BOND: A number of people from the Wal-Mart business.


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     ADV BHANA: What does your document say, just read exactly what
     the document says in this regard?
     MR BOND: The document says…
     ADV GAUNTLETT: Chair, may I just say in this regard I’m sure the
     witness will bear in mind confidentiality and whether he needs the
     room cleared at your...
     MR BOND: Good point. Well it is confidential, so we need to decide
     how we handle that.
     ADV GAUNTLETT: Chair, if it’s necessary, perhaps it is from Mr
10   Bhana’s viewpoint to have line-by-line identification and numerals, if
     that’s what he’s after, then it looks like we have to clear the room.
     ADV BHANA: Perhaps can you show me the document. Let’s see if
     there’s another way we can establish it.
     CHAIRPERSON: Just have a look at it briefly please.
     ADV BHANA: Can I have a look at the document to see the nature of
     the information?
     MR BOND: Can I do that?
     ADV GAUNTLETT: Yes.
     ADV BHANA: You were referring to page 3 of this report, are you?
20   MR BOND: I don’t know. You’ve got it. I haven’t got it in front of
     me.
     ADV BHANA: Let me pass it back to you and just tell us which page
     you are relying on.


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     MR BOND: Yes, page 3.
     ADV BHANA: Just give it back to me. Well, firstly I have to put to
     you that your evidence is not entirely truthful when you describe that
     the nature of the document was that you were looking at. You will
     recall you said to me this document is the detailed document that
     formed the basis of the synergies document. Do you recall that
     evidence?
     MR BOND: I believe that’s what I said, yes.
     ADV BHANA: Well, the cover page of this document says “May
10   2011, synergy discussion, international mergers and acquisitions”.
     So, your evidence in that regard was certainly untruthful. Correct.
     MR BOND: Sorry, in what way?
     ADV BHANA: I beg your pardon?
     MR BOND: In what way?
     ADV BHANA: Because you said this document was the document
     used, the underlying document for the synergies document at page
     892. You’ve just confirmed that.
     MR BOND: No, I referred to the fact it was the synergies document
     that was used as the background to the numbers that are in the
20   Genesis report.
     ADV GAUNTLETT: I wonder if I may help. It may speed up matters
     for Mr Bhana. That document...




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     ADV BHANA: Chair, I don’t want my learned friend to start
     explaining and giving evidence. The witness can do that.
     ADV GAUNTLETT: Chair, I can identify where the document is to
     be found and its original iteration in the discovered documentation,
     which I would have thought would be helpful.
     ADV BHANA: Chair, my learned friend can do that at a later point
     where he can re-examine on this.
     CHAIRPERSON: Is the document already in the record, despite that
     it is dated 2011?
10   ADV GAUNTLETT: Yes.
     CHAIRPERSON: Can you just tell us where it is?
     ADV GAUNTLETT: [Mic not on]
     CHAIRPERSON: Is the data exactly the same?
     ADV GAUNTLETT: I don’t think so, Chair. I think the witness must
     testify to that.
     ADV BHANA: Has my learned friend even seen this document? He
     seems to be commenting quite knowledgeably about it.
     CHAIRPERSON: Alright, carry on, Mr Bhana.
     ADV GAUNTLETT: I can do that quite often.
20   ADV BHANA: Well, my instructions are that item 3.3 is not this
     document and in any event, what I’m exploring is what this witness
     said when I asked him pertinently. He was looking at a document and
     he created the impression that this was the underlying information


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     used for the synergies document at 892. So, we can accept when you
     gave that evidence it was not correct, because this is a document
     created in May of this year, correct?
     MR BOND: Correct.
     ADV BHANA: The page that you referred to and I’m not going to go
     into confidential information, speaks about ... it is headed “improved
     supplier terms”. It then says “renegotiation of contract terms
     leveraging Wal-Mart’s global scale”. Do you confirm that?
     MR BOND: Sorry, which page are you referring to now?
10   ADV BHANA: Page 3.
     MR BOND: I haven’t got it.
     ADV BHANA: I’m just going to read this into the record and we’ll
     give it back to you.
     ADV McNALLY: Chair, could we have copies of this document?
     CHAIRPERSON: I think so.
     ADV McNALLY: We would appreciate that.
     CHAIRPERSON: I think so. Let’s take the tea adjournment early.
     Let’s get copies made of that and give it to everybody, including one
     of the witness and he may want time just to read it as well.
20   ADV BHANA: Yes.
     CHAIRPERSON: So, let’s take a 10-minute adjournment.
     ADV GAUNTLETT: Chair, in case there is any misunderstanding of
     your term “everyone”, it is obviously under confidentiality.


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     CHAIRPERSON: Yes, I’m saying everything that is...
     ADV GAUNTLETT: The legal representatives and experts only.
     CHAIRPERSON: Yes.
     ADV BHANA: Chair, rather than take the adjournment, I will need to
     come back to this fairly quickly, but can I go on with another aspects
     while copies are being made?
     CHAIRPERSON: Yes certainly. We can then deal with this after the
     adjournment. Then let’s take the adjournment around 3 o’clock then.
     ADV BHANA: Now, on your version you calculated that benefit to
10   be 10%. Was that a calculation that you did only in anticipation of
     this hearing or was it a calculation that was done at the time the
     synergies document was created and the deal put up to the Wal-Mart
     board?
     MR BOND: My recollection is it’s been a consistent number
     throughout this process.
     ADV BHANA: Now, what we do gather from the documentation is
     that certainly if one has regard to South African retailers, Makro is
     already 5% better than its nearest competitor in terms of price across
     the board. Do you accept that?
20   MR BOND: I haven’t got anything to refute that, but I would like to
     understand how you’ve measured that.
     ADV BHANA: Well, we will get back to that in a moment. I believe
     that is ... the basis is set out in the Genesis report, but I’m told that we


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     might be veering into the area of confidential information, but the
     basis is as set out in the Genesis report. Let’s accept for the moment,
     let’s accept for argument’s sake the hypothetical, that Makro is 5%
     better at the moment, without the merger. If one is going to achieve
     savings, further savings in the order of 10 to 15%, Wal-Mart is going
     to have to do something fundamentally and radically different to what
     Massmart’s rivals are doing in the market. Correct?
     MR BOND: I don’t know. It’s a hypothetical argument. You get
     hypothetical answers and I don’t understand the point of the question,
10   but yes, if you’re minus 5% lower and then you take of 10 to 15%,
     yes it’s a big number.
     ADV BHANA: No, that’s not what I’m putting to you and the
     hypothetical need not prevent you answering the question. Don’t duck
     the question. Assume that Makro is 5% better in price. What we see
     from the due diligence summaries, etc, is that overall Wal-Mart had
     the view that the Massmart operations were certainly very efficient,
     world class operations. Correct?
     MR BOND: They are good. Yes, they are good at what they do.
     ADV BHANA: Alright. To achieve a further 10 to 15% and whether
20   the hypothetical is 5 or 3, it doesn’t matter. To achieve a further 10 or
     15% in relation to somebody who is already good at what they do,
     already operating in a highly competitive market where margins are
     low, Wal-Mart will have to bring something fundamentally different


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     to the table in comparison to what Massmart’s rivals currently are
     doing. Correct?
     MR BOND: The numbers are yours. They are not mine. I’m not sure
     we can get to 10 or 15%.
     ADV BHANA: You keep trying to duck the question with the
     numbers. Just deal with the proposition. Deal with it conceptually.
     MR BOND: Conceptually to reduce Makro’s prices by another 10 to
     15% we would have to do something radically, definitely yes.
     ADV BHANA: And more efficient management, simply more
10   efficient management of the supply chain is not something radically
     different, I put to you.
     MR BOND: It is. We can be radically different, but whether it will
     achieve 10 to 15% I don’t know.
     ADV BHANA: What you certainly punt to the global investment
     community in terms of what you do different, your primary cell, if I
     can put it that way, is Wal-Mart’s global sourcing. That’s what you
     hold out as being fundamentally different, radically different.
     MR BOND: I don’t agree. I think we offer a number of things to
     companies that become part of the Wal-Mart family. That is supply
20   management.
     ADV BHANA: I didn’t ask you if it’s the only thing. I said that’s the
     primary cell. That’s the main feature of what you tell the investment
     community.


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     MR BOND: I would like you to evidence that, because certainly I’ve
     been involved in a lot of those presentations.
     ADV BHANA: I will.
     MR BOND: It’s one of the points, but it’s not the primary one.
     ADV BHANA: Okay, what is the primary point? Is there another
     point?
     MR BOND: Supply chain management.
     ADV BHANA: Oh okay, anything else?
     MR BOND: Talent development, ISD capability, know-how, access
10   to intellectual property, all the points that have been discussed.
     ADV BHANA: You hold all of those things out as equally important
     to the investment community.
     MR BOND: Well, it depends in which particular market and
     acquisition you are talking about, but they are all things that we feel
     strongly add value to businesses. It depends on acquisition by
     acquisition which ones are more important.
     ADV BHANA: You must please focus on the question I put to you.
     Do you hold all of those aspects out as being of equal importance
     when you tell the investment community why your results are so
20   great and why they are going to be as great in the future?
     MR BOND: I believe we do, yes.
     ADV BHANA: All of them equally?
     MR BOND: I believe we do, yes.


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     ADV BHANA: Have you been involved in those road shows for the
     investment community, if I can call it that?
     MR BOND: I’ve been involved in the analyst presentations, which
     are the critical ones that happen in October each year Bentonville,
     yes.
     ADV BHANA: So, you are there. You are present and you agree with
     the Wal-Mart line that gets presented to the analysts.
     MR BOND: Yes.
     ADV BHANA: I beg your pardon. Were you there at the presentation
10   in October last year?
     MR BOND: No, I was not.
     ADV BHANA: Are you familiar with what was presented to analyst
     then?
     MR BOND: Not in detail, no.
     ADV BHANA: Are you familiar to any extent? Did you see it? Are
     you aware of what was told to investors?
     MR BOND: In general terms. I wasn’t there. So, I don’t know what
     was said.
     ADV BHANA: You would have no reason to disagree with what
20   Wal-Mart, whoever it was represented by, was conveying to investors
     at that presentation.
     MR BOND: I would strongly suggest they were presenting accurate
     information.


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     ADV BHANA: Now, dealing with Wal-Mart’s global sourcing, you
     are aware that it increased in 2010.
     MR BOND: Yes.
     ADV BHANA: You’re aware that Wal-Mart held out that it was
     positioned and it projected that it would go on increasing its global
     sourcing in the foreseeable future?
     MR BOND: Yes.
     ADV BHANA: In fact, that was highlighted and these are my words,
     as a critical or fundamental tool in helping Wal-Mart cut prices across
10   the world, wherever it operated. Correct?
     MR BOND: Sorry, what are you asking me? They are your words,
     not Wal-Mart’s words.
     ADV BHANA: No, the increased global sourcing was held out to be
     a critical and fundamental tool and my words words are “critical” and
     “fundamental”, but if you want an important tool to help Wal-Mart
     cut prices, correct?
     MR BOND: I think that’s right, yes.
     ADV BHANA: And when one looks at global sourcing, food is not
     necessarily less susceptible to global sourcing than other commodities
20   such as house ware.
     MR BOND: Sorry, it’s not less susceptible?
     ADV BHANA: Yes.
     MR BOND: Well, I think it is largely less susceptible.


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     ADV BHANA: Really?
     MR BOND: Yes.
     ADV BHANA: So, you would say that when it comes to food, there
     is very little opportunity to bring prices down through global
     sourcing.
     MR BOND: There is some, but it’s more an example of how we have
     done that. So, to support your theory, exporting South African citrus
     food to Wal-Mart across the world, that is a relatively small amount
     of overall food product.
10   ADV BHANA: You choose as an example fresh produce. What about
     processed food, imported cheeses, tomato sauce?
     MR BOND: I think there is a limited ability to do that where there is
     a local source available. You use processed foods, Parma ham. You
     are not going to make Parma ham in the UK. You are going to make
     it in Italy, because that is where Parma ham comes from.
     ADV BHANA: And tomato sauce?
     MR BOND: I don’t know.
     ADV BHANA: There is no reason why one couldn’t benefit
     substantially from sourcing tomato sauce, even if South Africa is
20   sourcing tomato sauce from the US.
     MR BOND: The fast majority of food, as our submission suggests, in
     all of the Wal-Mart markets, is produced locally, well over 90% in
     virtually every case.


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     ADV BHANA: Is that fresh produce or does it include processed
     food?
     MR BOND: I believe that the numbers at the Makro level are across
     food overall.
     ADV BHANA: Well, we will check that. Whilst we are on the aspect
     of global sourcing and how it has increased in countries and stores
     where Wal-Mart has a presence, and I’m looking at Wal-Mart, it’s
     certainly prevalent in all regions where Wal-Mart operates and it is
     not limited to two or three or five of the areas. Correct?
10   MR BOND: Sorry, could you just repeat the question?
     ADV BHANA: Yes. The trend as to increased global sourcing is
     prevalent in all of the areas where Wal-Mart operates.
     MR BOND: I think to say all would be wrong. I think it depends
     market-by-market, category-by-category, but I think the general trend
     is as you suggest, yes.
     ADV BHANA: Yes, so it’s a general trend, forgetting specific
     variations within categories. That occurs in every country where Wal-
     Mart operates. Wal-Mart increases its global sourcing. Correct?
     MR BOND: Yes, but if I’m allowed to make a point of clarity, that is
20   almost entirely a substitute for indirect imported product.
     ADV BHANA: Elaborate on that.
     MR BOND: To the point of definition that was discussed yesterday,
     our objective is to deliver efficient supply chains. There are occasions


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     when dealing direct with a vendor in whatever country, is it more
     appropriate than to go through a middleman who is sourcing from the
     same factory and just importing. That’s the definition of indirect
     import.
     ADV BHANA: So, you say Wal-Mart simply cuts out the middleman
     and that’s where it obtains the substantial global sourcing benefit
     from.
     MR BOND: I wouldn’t suggest that’s all cases, but that is by far the
     majority of cases. I don’t have the detailed numbers, but that is
10   certainly my experience in the markets that I have been involved
     with.
     ADV BHANA: It’s an aspect we’ll come back to, but is that really
     true broadly speaking, because even where you out the middleman, so
     to speak, that’s perhaps a bit misleading, because you simply
     substitute one middleman for a Wal-Mart associated company or for a
     Wal-Mart division acting as the middle man. Correct?
     MR BOND: To an extent that’s true, but it is creating further
     transparency down the supply chain, which allows us to deliver the
     overall principle of supply chain management I referred to. When you
20   have a direct relationship through your business, your business most
     generally, so including your global procurement office, allows you to
     forecast more accurate, to link that supplier into our technology. We
     have a technology platform called Retail Link, which provides


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     vendors with direct information of sales. You can do that much more
     easily through a direct relationship than through a middleman.
     ADV BHANA: Alright, so it’s not the benefit of cutting out the cost
     of the middleman. What you are saying is by using one of the Wal-
     Mart agents or divisions – and we will talk about them and there are a
     few of them – what one does is you make the middleman more
     efficient in terms of the information it conveys.
     MR BOND: Yes, although I wouldn’t like it to be understood by the
     group that there aren’t occasions when we would cut out the
10   middleman, simply because of the cost additive without any benefit.
     There will be occasions when that will happen as well, but it is
     certainly true that what you say is one of the benefits, yes.
     ADV BHANA: There are always exceptions. We’re dealing with the
     general picture.
     MR BOND: Yes.
     ADV BHANA: Okay. And the aspect we will come back to, but we
     can throw around a few names. Those middlemen could be companies
     such as Lee and Fung or Fung Lee, I forget which way around it is.
     Correct?
20   MR BOND: Sorry, the middleman?
     ADV BHANA: Yes.
     MR BOND: No, I mean, Lee and Fung is a recognised name, but they
     aren’t a middleman in the way I’m describing it. I’m describing it,


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     and forget me for using the UK example, we used to buy socks
     through a guy in the east end of Linden who bought them from a
     factory in China and all he did was import them and ship them on to
     us. They are the sort of guys who add relatively little value, which
     will need to think about how they exist in the future. I’m not talking
     about Lee and Fung.
     ADV BHANA: You are misunderstanding my question.
     MR BOND: I’m sorry.
     ADV BHANA: I’m not talking about the middlemen that you cut out.
10   I’m talking about the ones that you substitute for the people that you
     cut out or stop doing business with. In the UK there are entities such
     as IPL, correct?
     MR BOND: Yes.
     ADV BHANA: In Chile it’s the entity such as WSG.
     MR BOND: Yes.
     ADV BHANA: WSG in turn are owned by Lee and Fung.
     MR BOND: Yes.
     ADV BHANA: In partnership, I don’t know the exact percentage
     with Wal-Mart.
20   MR BOND: Yes.
     ADV BHANA: Elsewhere it’s Lee and Fung directly. Those are the
     kinds of agents we are talking about.




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     MR BOND: Yes, I agree, and to complete the picture, there is a
     substantial amount which is through Wal-Mart direct offices as well,
     but you are right.
     ADV BHANA: Okay. Now against that background I want to put a
     few propositions to you, which emanate from Wal-Mart documents. I
     will take you to the documents shortly, but these are the propositions.
     In dealing with Wal-Mart’s procurement practice, Wal-Mart is
     moving to adopt a single practice internationally across all its chains
     in all of the regions it operates in. Correct?
10   MR BOND: In what sense a similar practice?
     ADV BHANA: Call it a model, call it a philosophy, whatever it is
     and sure, country-to-country there will be reasons why you don’t
     apply the model in toto, but the model as such and the procurement
     practices as such is a practice, which Wal-Mart wants to see
     uniformly adopted internationally across all of its chains.
     MR BOND: No. I fundamentally disagree. First of all, the product
     selection is totally the accountability to the local country
     management.
     ADV BHANA: That’s now what I was putting to you.
20   MR BOND: Well, it is in a sense that then drives your sourcing
     structure.
     ADV BHANA: The way you go about procuring and the way you go
     about sourcing locally, forgetting which products you do it with, is a


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     practice that Wal-Mart wants to see evolve as a uniform practice
     across all of the Wal-Mart operations.
     MR BOND: We definitely share best practices. The actual selection
     of merchandise, where it is sourced from and the manner in which it
     is sourced is the accountability to the local country management.
     ADV BHANA: Again, that’s not what I’m putting to you, but you
     agree that what you call the international best practice is what Wal-
     Mart wants to see evolve as a uniform practice across all of its
     operations.
10   MR BOND: Well, can I just answer specially about Massmart? The
     Massmart agreement is an arm’s length contractual arrangement,
     which allows Grant pressing the board specifically o select its
     adoption or otherwise of the Wal-Mart practice of sourcing.
     ADV BHANA: That might be, but I’m talking about Wal-Mart and
     what it envisages happening.
     MR BOND: Well, we envisage applying by the...
     ADV BHANA: Forgetting that a local manager may decide I’m
     sourcing product A but not product B from Wal-Mart. That’s the kind
     of decision you are talking about at store level.
20   MR BOND: Yes.
     ADV BHANA: That has nothing to do with what I’m putting to you.
     MR BOND: Right.




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     ADV BHANA: The fact that that manager will, through whatever
     tools you provide, have access to your information platform, have
     access to your ordering systems, the claims are quite impressive, with
     a click of a button be able to see the kind of stitching on a product,
     whether he wants to buy that product, that is a uniform practice which
     is going to take place across all Wal-Mart stores.
     MR BOND: Again, to try and answer the question specifically with
     Massmart, in general I agree with you, but specifically the adoption of
     both the global sourcing arrangement and the IT systems platforms
10   are the decision of the Massmart board.
     ADV BHANA: Mr Bond, you are not as dumb, as you said to Mr
     Kennedy, that perhaps you may be. So, please don’t harp back to the
     specific decision in relation to a specific product. We are talking
     about method and process. I’ve made that clear three times now and I
     think you understand that.
     MR BOND: Forgive me if I’m being repetitive. I agree with you in
     general, but I’m trying to clarify with regard to Massmart that the
     decision making is retained within the Massmart board.
     ADV BHANA: Now, when it comes to global leverage, the second
20   proposition is that Wal-Mart, as a company, is focused on
     aggressively pushing cost savings through global leverage. Correct?
     MR BOND: Through adopting best practice supply chain both
     domestically and globally, yes.


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     ADV BHANA: I’m talking about procurement and global leverage.
     Correct?
     MR BOND: Yes.
     ADV BHANA: Right. And it does so principally through three
     channels. The first is its global merchandising centres.
     MR BOND: Yes.
     ADV BHANA: The second is its partnership with sourcing agents
     such as Lee Rung, WSG, I think they refer to the direct sourcing
     group. Correct?
10   MR BOND: Correct.
     ADV BHANA: And the third channel is through its traditional direct
     imports.
     MR BOND: Correct.
     ADV BHANA: And the global merchandising centre or centres –
     there are several of them – promote global leverage by creating
     platforms for the Wal-Mart stores. Correct?
     MR BOND: Correct.
     ADV BHANA: Information platforms.
     MR BOND: Correct.
20   ADV BHANA: The kind of thing I was putting to you perhaps quite
     superficially, clicking on, seeing what kind of product is available
     internationally, stitching on the product, quality, etc, etc.
     MR BOND: Correct.


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     ADV BHANA: So, when one talks about information, it’s not
     information in the abstract. It’s information which certainly in part
     will be used to increase global sourcing. Correct?
     MR BOND: I’m attempting not to frustrate you by answering it. I
     mean, if we take specially the George product, because they all came
     up later, George, the UK design office is a GMC. So, to help explain
     your point, the UK team design product that is then technically shared
     by IT with all of the markets. Where those markets source that
     product from is not a central decision. That is a local decision. So, as
10   an example, Wal-Mart Mexico will receive a design pack
     electronically from the UK and then they will source domestically,
     because that is there within Mexico, because that is their choice.
     That’s the way that the GMC intellectual property process works.
     ADV BHANA: It’s certainly not the way I understood it. Are you
     saying that that intellectual property is limited to design, which the
     local operation then takes and gets manufactured locally or decides to
     import?
     MR BOND: Yes, it is. I mean, the two things are separate. We share
     intellectual property, the design and know-how level. The local
20   country management has access to all of those flows, because it’s
     including global procurement. I accept that, but it’s their choice and it
     has to be their choice, because of tariff barriers, etc, where those
     products are sourced.


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     ADV BHANA: Choice aside, it goes beyond design, because the
     global merchandising centre will also have stock of the item, which it
     has procured from wherever it decides best. Correct?
     MR BOND: That is certainly not my experience and understanding. I
     mean, I think if you have an example to refute my point, I would like
     to hear it, because that’s not my understanding.
     ADV BHANA: So, you are suggesting that the GMCs are simply
     there to exchange product information in relation to design of
     product.
10   MR BOND: Absolutely, and I’ve given you the specific example,
     which is a GMC that I ran for a period of time. I recognise I don’t
     have all the information on all GMCs, but I do have information on
     the George apparel GMC, because it was the first one not in the US
     and that’s exactly how I ran that business. We shared IP through
     design packs. You have to do it that way, because the nature of import
     tariffs, etc, will not allow you to dictate where things are sourced.
     ADV BHANA: But the simple point about it is this. Local regulatory
     barriers aside, in most cases if the GMC, the UK GMC was procuring
     its denim jeans from China, other stores would simply piggyback on
20   that and be part of the order that you placed on China for George
     denim jeans.
     MR BOND: Not true.




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     ADV BHANA: No, there is no benefit at all in terms of using your
     international suppliers and getting larger orders together by placing
     those?
     MR BOND: Of course in theory there is, but the practice is not quite
     as straightforward as that. I will give you a simple example. The
     cotton weight for a T-shirt that is preferred in the US is a
     fundamentally different cotton weight to the one in the UK.
     ADV BHANA: You keep going back to choice, the decision of the
     local buyer. That might be a different thing, but that aside denim
10   jeans, 7 pounds, you are buying vast, you being George GMC in the
     UK buying vast quantities from China. Most of your other sources are
     simply going to piggyback on those large orders that you are placing.
     MR BOND: Look, I’m not in any way trying to project that doesn’t
     happen. I’m trying to characterise the level at which it happens. It is
     an unusual circumstance that yes there are examples of that, but I
     would also try and answer the question by dispelling the myth about
     scale. I mean I have worked in the manufacturing base for six years
     prior to being a retailer and certainly my experience of being a
     clothing buyer before as part of Wal-Mart is I could go and buy
20   products as an independent company as cheaply as Wal-Mart does.
     So this idea that you know buying 5 million pairs of jeans you get a
     lower price than 1 million pair of jeans it is just not true.




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     ADV BHANA: So you are saying it is rather an exception than the
     general feature that Wal-Mart stores will benefit from the scale of
     Wal-Mart buying globally?
     MR BOND: Well I guess I would be contradicting myself if I said
     any other, because our submission and when we come back to the
     finished document we recognise a relatively small scale of benefit in
     direct importing because that is not where we see the main benefits.
     We have seen the main benefits not buying that one extra pair of
     jeans. We see the benefit in supply chain know-how capability of
10   shipping that jean in a much more efficient way that is the way we
     will benefit Massmart.
     ADV BHANA: Mr Bond, the question is a simple one. Is it your
     evidence that it is the exception rather than the general rule that
     Wal-Mart stores will benefit from the scale of Wal-Mart global
     procurement? In other words, by virtue of sheer numbers and
     volumes of orders placed?
     MR BOND: Sorry Wal-Mart generically does not have a lower cost
     price than some of its competitors, is that your point?
     ADV BHANA: No, I don’t know why you are not listening to the
20   question. Your evidence, you gave evidence as to when one would get
     a Wal-Mart store in Mexico piggy backing on an order that Wal-Mart
     or ASDA UK would place on a Chinese supplier. And as I understood




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     your evidence you said it certainly may happen, but it is more unusual
     than usual for that...
     MR BOND: Yes, I am sorry. And the answer to your question is that
     is my understanding and experience yes, the occasions when that
     happens are relatively limited, because at country levels businesses
     are big enough to benefit from scale already.
     ADV BHANA: Ah, but that is because a benefit of being part of a
     Wal-Mart store country by country?
     MR BOND: No absolutely not, because independently they are big
10   enough to deal with vendors and get good terms already.
     ADV BHANA: Did ASDA benefit significantly from these scale
     benefits by being part of the Wal-Mart family or not?
     MR BOND: In terms of cost prices the evidence as independently
     judged by the Competition Commission would suggest that ASDA is
     not cost price benefited from being part of Wal-Mart and that is
     public domain information.
     ADV BHANA: Yes.
     MR BOND: I think our lawyer can … it is on the Competition
     Commission website I believe, three times in the last 15 years.
20   ADV BHANA: Now just as a fact has ASDA not benefited merely
     from being part of the, not merely, has it not benefited substantially
     by virtue of these procurement benefits arising from scale benefits?




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     MR BOND: No ASDA has benefited from the sharing of know-how
     about supply chain management.
     ADV BHANA: And is that what ASDA has held out to the general
     public as to where it gets its benefits from?
     MR BOND: I don’t think … we have been particularly transparent
     about exactly where we get the benefits from that is not of interest to
     consumers to be honest. In my view of...
     ADV BHANA: Is it of interest to your investors?
     MR BOND: ASDA is not a limited company, so it is a subsidiary of
10   Wal-Mart.
     ADV BHANA: And elsewhere in the world is it of interest to the
     Wal-Mart investors?
     MR BOND: Is what?
     ADV BHANA: As to where consumers get the benefits from, as to
     what enables Wal-Mart to achieve better prices?
     MR BOND: I can’t judge in my view consumers are interested in the,
     on occasions the origin of a product, hence the reasons still the vast
     majority goods are bought locally. And they are interested in the
     provenance and efficacy. I don’t think they are particularly interested
20   in whether we have shipped it in a full container or not a full
     container.
     ADV BHANA: Well I intend to come to this in a different context,
     but perhaps let’s just see what ASDA has been holding out to the


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     public. And we take you to some documents that we have got from
     the internet ASDA and Wal-Mart documents.
     CHAIRPERSON: Can we call this Exhibit B?
     ADV BHANA: Yes Chair, thank you.
     ADV GAUNTLETT: Chair, I would like to reserve our position on
     this. This is evidently beautifully pre packaged and prepared, no
     precognition, no discovery with the introductory phase and it comes
     off the internet. With great respect, it is not the way the proceedings
     have been run up to now. We haven’t been allowed to ambush each
10   other and we would want to reserve our position as I say. It is nothing
     that the witness had a moment to look at, no explanation.
     ADV BHANA: Chair this pack was prepared overnight and was
     settled this morning. It consists of documents which comes off, in a
     majority of the cases, Wal-Mart websites so there shouldn’t be
     anything surprising in these documents.
     ADV GAUNTLETT: This witness does not carry an elephantine
     memory of every Wal-Mart piece of paper. This is unfair and
     inappropriate and we ask you to disallow it.
     CHAIRPERSON: Perhaps let’s [cell phone interference].
20   ADV BHANA: Indeed the objection started as a reservation of rights
     and quickly developed into a disallowance of the bundle. So I am not
     sure what we are...




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     ADV GAUNTLETT: No, it is the latter Chair now that we know
     from our learned friend that there has been no explanation other than
     it was prepared overnight and when we all had this date in our diary.
     We have all had to prepare and it is not a proper and fair basis Chair, I
     ask you to disallow it.
     CHAIRPERSON: I will allow it carry on Mr Bhana.
     ADV BHANA: Thank you Chair. Turning to page 2 or page 1, this is
     an article from the Telegraph it deals with an interview with Mr Tony
     Denunzio I am not sure if I am pronouncing his name correctly.
10   MR BOND: Pretty well.
     ADV BHANA: And the header at page 2 says: “Tony Denunzio is
     putting the American parent groups’ huge retail power to full use
     against UK rivals.” Is that what Mr Denunzio did while you were
     involved with ASDA?
     MR BOND: You are going to have to be more specific than that, of
     course we have benefited from being part of Wal-Mart I have not
     refuted that at all.
     ADV BHANA: Let’s go to the detail. At the bottom of page 2 just as
     background we read: “Three years after Wal-Mart’s £6.7 billion
20   take-over ASDA is out performing its rivals even the mighty Tesco”
     and then it deals with the store visit and the results correctly, as you
     point out in page 3 in the middle it says: “Since the Wal-Mart take-
     over ASDA does not report profits or sales figures although city


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     analysts reckon £3 billion has been added to sales over the past three
     years, taking its turnover to more than 11 billion, 30% over three
     years”. And then the paragraph after “so how has ASDA done it?”
     and it then provides specific examples on page 4, which is the focus
     of my interest.
            And the fifth paragraph says: “And what an amazing retailing
     machine it is, with its £218 billion of annual sales Wal-Mart’s global
     buying power is vast and as one city analyst describes it, ASDA is
     now piggy backing on an enormous elephant, increasingly it is
10   tapping into Wal-Mart’s global sourcing and reinvesting the savings
     into lower prices” true or not of the ASDA operation?
     MR BOND: Again I have not refuted the fact that we have benefited
     both from global procurement and more importantly global sourcing.
     This is where the nomenclature can sometimes get ... I mean this does
     not identify that we have necessarily bought things at a significantly
     lower cost price from a certain factory.
     ADV BHANA: It is not what I put to you, but ASDA benefited
     substantially from piggy backing on Wal-Mart’s global sourcing
     correct?
20   MR BOND: Well that is what it says and I am trying to clarify for
     you that...
     ADV BHANA: You were the CEO of ASDA do you confirm that or
     not?


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     MR BOND: No, I wasn’t CEO of ASDA at that time, Mr Denunzio
     was.
     ADV BHANA: Alright what was your position then?
     MR BOND: I was running, what is the exact date of this article June
     2002; I was running the George apparel business for ASDA.
     ADV BHANA: And when you … you became CEO after that?
     MR BOND: CEO in 2005.
     ADV BHANA: Right and when you became CEO is the trend or the
     feature that Mr Denunzio described did that continue?
10   MR BOND: Our direct import program was largely complete by 2005
     not that my memory can remember everything, but we continued to
     benefit from the efficiencies in the supply chain that I have referred
     to.
     ADV BHANA: So from 1999, which is about the time of the Wal-
     Mart take-over to 2004 did you say, 2005, there was a substantial
     direct import program taking place?
     MR BOND: Some of which was the removal of middlemen as my
     sock example.
     ADV BHANA: Do I understand your evidence correctly that you
20   spent the first five or six years after take-over in a substantial import
     program at ASDA?
     MR BOND: We were already importing indirectly. We moved to a
     direct import model, yes.


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     ADV BHANA: Alright. And that was implemented over a period of
     six years approximately on...
     MR BOND: I mean yes, the exact dates are not relevant unless you
     want me to try and remember but yes, roughly that time.
     ADV BHANA: Now let’s look at the specific examples. “Denunzio
     reckons that ASDA is now 12% cheaper than its rivals on 1 600
     different products compared with being 7% cheaper on the same
     items three years’ ago. Take bananas, since most food is locally
     sourced the opportunities for global sourcing are less than in other
10   goods, but Wal-Mart is now buying ASDA's bananas along with its
     own and Denunzio says his cost price is down by a fifth” 20% even in
     relation to a food item such as bananas correct?
     MR BOND: In the context of the comment that most food is bought
     locally, but bananas the example is right, yes.
     ADV BHANA: And that is where ASDA piggy backed, if you want,
     combined its orders whatever you want to describe it as with Wal-
     Mart orders.
     MR BOND: The price and I am pretty confident about this, the cost
     price outsourced did not change the issue was because we are part of
20   the Wal-Mart business we flowed goods in a different way including
     a ripening centre in Rotterdam, which we didn’t have before, which
     allowed us to reduce the overall price not necessarily the acquisition
     price.


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     ADV BHANA: Whatever you say, whatever you say the benefit arose
     from, whether through forcing a supplier to give a lower price or
     simply through, as you say, the way you moved those goods through
     the Wal-Mart operation it lowered prices on bananas by a fifth.
     MR BOND: Correct.
     ADV BHANA: “The gains in non food products are much bigger,
     some 2 000 of the 5 000 new general merchandise lines at the Pudsey
     store” am I pronouncing that correctly?
     MR BOND: Yes.
10   ADV BHANA: “Are globally sourced, reducing cost prices by about
     a quarter”. So the maths is simple. 40% of the merchandise is
     globally sourced and there is a cost price saving of about 25% as a
     result of global sourcing, correct?
     MR BOND: The product was made in the same factory in China,
     which I visited and the middle man was cut out.
     ADV BHANA: No, no, just deal with what I am saying to you. Is that
     correct? Can we accept that fact as correct that 40% of procurement
     was through global sourcing?
     MR BOND: I am convinced it was....
20   ADV BHANA: And that resulted in a cost price saving of about
     25%?
     MR BOND: Yes and I have clarified why, yes.




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     ADV BHANA: Right “For example it is basic George jeans cost
     £14.99 before the takeover three years ago. They now sell for £7
     because with Wal-Mart’s help ASDA have spent 50% less for its
     denim, unsurprisingly 1 million pairs of jeans are now sold a year,
     against 170 000 three years’ ago” substantial benefit as a result of
     the Wal-Mart global sourcing, correct?
     MR BOND: Again removed a middle man in Litoith in Leicestershire
     and went direct to the factories.
     ADV BHANA: You know you keep telling me something that
10   doesn’t deal with the question I am putting to you. I am just asking
     you to confirm whether factually that is correct or you have got any
     reason to disbelieve what is said here.
     ADV GAUNTLETT: With respect the witness is not obliged to give
     the yes or no answer which is desired. The witness is, with respect,
     entitled to explain why.
     ADV BHANA: You can give an explanation after just tell me first
     factually was that correct or not that because of the Wal-Mart
     coupling itself with the Wal-Mart orders or procurement it managed
     to buy denim for 15% less is that factually correct or not, you have...
20   MR BOND: I have got no reason to doubt it.
     ADV BHANA: Right and you wanted to give an explanation.
     MR BOND: Correct, which the large element of saving in all of these
     examples is the fact that we were buying from similar if not the same


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     factories in the same countries of origin and we were just removing
     middlemen.
     ADV BHANA: Well how do you know that, because you were only
     involved with apparel at that time, yet you give your answer as a
     general answer for all categories?
     MR BOND: I have, over the years … had bought in a number of
     these categories, I have been to the factories I have bought these
     things.
     ADV BHANA: And according to you at the time you were involved
10   only with apparel?
     MR BOND: Both of those facts are true and they are not
     diametrically opposed. I was not involved with the core as to
     business. I was involved with the George business, which is
     independently run and I was MD, but over the years I have bought
     those goods.
     ADV BHANA: Right, when did you start buying those goods?
     MR BOND: I have been responsible for general merchandise a couple
     of times once in the 90’s and once later on in 2004, 5, 6 brief, I can’t
     remember the exact...
20   ADV BHANA: And the 90’s was that before the Wal-Mart take-
     over?
     MR BOND: Yes.




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     ADV BHANA: So we can disregard that. And in 2004 I think you
     said by that time the direct importing program was already fully
     implemented?
     MR BOND: Yes and if I may clarify I don’t understand why me
     being involved in the 90’s is dismissed, because it allows me to
     explain how the goods were bought before being part of Wal-Mart, so
     I know they were bought from the similar factories.
     ADV BHANA: But you don’t know how the cost savings arose from
     then to 2004?
10   MR BOND: I can have a very good view, I ran the company for five
     years later on and I ran GM a bit after this so it allows me to have an
     oversight in terms of what fundamentally changed in the business.
     ADV BHANA: So by virtue of your running the company from 2004
     you can give us...
     MR BOND: 5.
     ADV BHANA: 2005 you can give us detail as to the reason why it
     was able to procure denim for less in I think, what did you say the
     period was when Denunzio was CEO 2002?
     MR BOND: Yes.
20   ADV BHANA: Remarkable level of detailed knowledge you have.
     MR BOND: Well denim I was running George we just talked about
     that.




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     ADV BHANA: And how about blanket fees were you involved in
     that at all?
     MR BOND: In what sorry? No, I wasn’t.
     ADV BHANA: Another good example is blanket fees. Denunzio says
     that ASDA used to buy 50 000 yards of fleece at $9.00 a yard, Wal-
     Mart buys 6 million yards of fleece at $3 a yard. It all translates into
     lower prices for customers, again piggy backing on the Wal-Mart
     global procurement correct?
     MR BOND: Correct.
10   ADV BHANA: And then on page 5 the article says this, paragraph 4:
     “But it is not just global sourcing that is behind ASDA's
     performance. The company has introduced Wal-Mart systems
     including a fancy little electronic gadget that looks a bit like a game
     boy with a handle it accepts its brand at Wal-Mart” and then it says
     what the gadget does, but the primary thrust of the article that whilst
     it is not just about global sourcing it is primarily about global
     sourcing although the information systems of course do play a part,
     correct?
     MR BOND: That is what the article says. It is my experience and
20   evidence as we will see when we come back to the synergies
     document that the systems and the flow of goods capability are
     substantially more than the direct import program. If you want me to
     answer this yes that is what the article says.


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     ADV BHANA: Yes and that is what Wal-Mart or ASDA was holding
     out?
     MR BOND: Yes that is what the article says.
     ADV BHANA: Right, I think we can take the tea adjournment.
     CHAIRPERSON: We will come back in 10 minutes.


                                     Adjournment
     On resumption:
     ADV BHANA: I haven’t had sufficient time to study this, but I would
10   just like to hand it out and perhaps give it an exhibit number, Chair.
     MR BOND: May I have my original back? Is that alright?
     ADV BHANA: Yes, absolutely.
     MR BOND: Thank you.
     CHAIRPERSON: It’s Exhibit “C”.
     ADV BHANA: I will come back to this document time permitting,
     but it looks to me like this is a briefing document that was prepared
     for you to assist you with giving your evidence here, is that correct?
     MR BOND: I have been involved in the development of the
     synergies, but it is certainly a document to help me refer to the many
20   detailed facts that are involved in this case. So yes, you can
     characterise it as a document...
     ADV BHANA: Who prepared the document for you?




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     MR BOND: The people who prepared the document are the people
     who led the development of the synergies, which is a group led by
     myself and others that work out in Bentonville that are involved in
     any acquisition.
     ADV BHANA: You did not prepare this document, correct?
     Somebody else prepared it.
     MR BOND: Personally I didn’t, but I’m aware of it and signed it off.
     ADV BHANA: Signed it off for what purpose?
     MR BOND: Well, for it to be considered a reasonable representation
10   of our best knowledge in terms of where we will get the synergies.
     ADV BHANA: Trying to build a line to deal with the Genesis report,
     is that the purpose of the document?
     MR BOND: I can’t agree with that at all, no. I mean, you yourself
     referred to it. Well no, it’s not.
     ADV BHANA: We’ll study this document and we’ll get back to it,
     but in the tea adjournment you’ve been paging through the bundle.
     So, you’ve got an idea of what is in this document, correct?
     MR BOND: Sorry, are we back to this Exhibit “B”?
     ADV BHANA: Yes.
20   MR BOND: Yes, I’m aware of what’s in it.
     ADV BHANA: And if I can deal with the ... perhaps just whilst we
     are in the UK, can you turn to page 6 of that document?
     MR BOND: Yes?


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     ADV BHANA: That has a very nice photograph of yourself see. We
     can see that and this says global sourcing is the key for ASDA. This
     is a February 2010 document.
     MR BOND: Yes.
     ADV BHANA: So, even after the direct imports program according
     to your evidence was completed in 2005, global sourcing remained
     the key for ASDA as at February 2010.
     MR BOND: Again, I think it will be consistent with what I said
     before the break. We will continue to get benefits by learning
10   increasingly about how to flow goods better. That is my view of what
     global sourcing means. In fact, the article you refer to refers to IPL
     and then your own document describes the improvements we’re
     making in the flow goods for IPL and it shows in detail the discussion
     point about moving goods more efficiently through moving
     middlemen.
     ADV BHANA: It shows a number of other things as well. You say
     roughly in paragraph 6 “it is now extending its activities into a wider
     range of products such as imported cheese, cooked meats, pate and
     pasta, global sourcing of processed foods”, correct?
20   MR BOND: No, that is IPL.
     ADV BHANA: Yes, but IPL is essentially Wal-Mart.
     MR BOND: If you allow me to sort of complete the picture here,
     imported cheese, cooked meats, pasta and pate are products that are


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     not made and cannot be made in the UK. They are products sourced
     from Europe. They have historically been bought through middlemen.
     IPL is setting up a direct supply chain and that’s what that comment
     reports on.
     ADV BHANA: And then it says through a combination of better joint
     sourcing of product with Wal-Mart, the introduction of new global
     merchandising centres and removing the middleman wherever
     possible will be said to unlock the full potential. So, the removal of
     the middleman is just one of three aspects that is used to unlock the
10   potential, one of the others being global sourcing. Correct?
     MR BOND: Correct.
     ADV BHANA: Then if you can turn to the presentation...
     MR BOND: What page am I on, please?
     ADV BHANA: Page 86.
     MR BOND: 86?
     ADV BHANA: 86. This is, you said you were present at some of
     these presentations. You weren’t present at the October 2010 one.
     MR BOND: Correct.
     ADV BHANA: But you would have no reason to disagree with this
20   and so I’m going to put certain aspects and if you do disagree, you
     will tell us why. Firstly, as page 87 it deals with key takeaways from
     October 2009. I take it you were present at that presentation in 2009.
     MR BOND: I can’t remember, but I’m pretty sure I was, yes.


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     ADV BHANA: Under leverage it says “re-energise the productivity
     loop” and we’ll get to that and it also says “leverage global scale and
     expertise”. It’s a key feature of what was presented to the investment
     community, correct?
     MR BOND: Yes, and if I may articulate what I interpret that as
     meaning, that is about leveraging scale in the ways we’ve talked
     about, about improving the flow of goods through expertise and
     through efficiency of moving goods.
     ADV BHANA: So, it’s leveraging through scale and through
10   efficiency.
     MR BOND: Yes.
     ADV BHANA: Not just efficiency. Then if we can go to page 94,
     again the same point. We are very pressed for time, so we’ve heard
     your answer as to what you say global scale and expertise is. Here it
     confirms “how does Wal-Mart create value; enhancing distribution
     and logistics capabilities, accelerating growth, implementing best
     practice and leveraging global scale and retail expertise”. Again
     scale, not just in relation to efficiency, but also in relation to volume.
     Correct?
20   MR BOND: Scale means efficiency.
     ADV BHANA: Really?




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     MR BOND: I’ve already explained in my view very little, if any,
     benefit gained in the manufacturing costs of the good through the
     scale of Wal-Mart.
     ADV BHANA: Alright, and sourcing also means efficiency only or
     does it cover procurement?
     MR BOND: Look, in my view there will be examples that you could
     provide or I could provide where Wal-Mart will be able to provide a
     product of low cost to Massmart, but in my...
     ADV BHANA: Let me interrupt you. Wal-Mart talks repeatedly
10   about global sourcing. When it does that, can we accept that it’s not
     just talking about the benefits of efficiencies, but also of access to its
     suppliers and of larger volumes and getting the benefit of that? Can
     we accept that it at least includes that?
     MR BOND: No, not on the assumption that that is a large element of
     the benefit, no we can’t.
     ADV BHANA: No, that’s not what I put to you. Does it include it or
     not?
     MR BOND: Yes.
     ADV BHANA: Alright. Now, let’s look at page 95. That’s the
20   productivity loop we were talking about that was referred to in one of
     the earlier slides and it has the circle and in terms of buying for less,
     what drives that is global sourcing. Correct?
     MR BOND: Correct.


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     ADV BHANA: If we can then deal with page 110, that supports what
     I put to you that global sourcing, as far as Wal-Mart is concerned, is
     evident in every region in which it is involved in. Correct?
     MR BOND: I have previously accepted that, yes. I agree.
     ADV BHANA: And some of the regions are quite substantial, the
     benefits, others a little less, but certainly in the order, if you take a
     rough average, of about 30%. Correct?
     MR BOND: Yes.
     ADV BHANA: Then at page 111 “our global presence enables us to
10   source directly from suppliers around the world” and not even you
     can have a difficult with what source means there. Source there
     means simple procurement. Correct?
     MR BOND: Directly run through the middleman, yes.
     ADV BHANA: Yes. And the merchandising centres that we spoke
     about are identified and including the DSG direct sourcing group.
     That’s probably China, Hong Kong and refers to Lee and Fung.
     Correct?
     MR BOND: I’m not familiar enough to be able to confirm that. I
     can’t deny it.
20   ADV BHANA: Page 112 we have an example and you spoke about
     information, etc, but that information really and technology drive the
     sourcing, the platforms we spoke about and there is an example of
     where a buyer is sitting, for example, in Makro in Main Reef Road


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     and he would be able to gain access to the Wal-Mart global sourcing
     network and would be able to, at his desk, sit, call up the product and
     order it, if necessary.
     MR BOND: And the example given is George and I’ve previously
     explained how that works. The sourcing decisions are taken locally,
     yes.
     ADV BHANA: Okay. Now there is also in the pack that you have
     transcripts of what was conveyed, apart from the slide presentations,
     by Wal-Mart representatives to investors and I’m going to simply put
10   certain features to you. The actual source, the transcripts themselves
     are there and in the question and answer session the following
     appears.
     MR BOND: Which page are you on now, please?
     ADV BHANA: I haven’t trawled the transcript, but you will find for
     example in Mr Doug McMillan’s transcript, they are all to be found
     from page 116 onwards. I can assure you what I’m putting to you are
     quotations taken from the transcripts. I just want to speed up things
     by putting this to you. Don McMillan, president and CEO of Wal-
     Mart, said “our focus continues to be on growth, leverage and
20   returns. There are benefits to being global. While it’s a business
     that’s local, we can see things across markets today and help reactor
     trends that we see to enable us to serve customers. Two trends that
     continue to be big issues are price and value”.


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           So, he is emphasising that you leverage global scale to get
     better price and value for the customers. Do you agree with that?
     MR BOND: Sorry, can you repeat that? I’m not sure I get the
     connectivity myself.
     ADV BHANA: He emphasises benefiting or using global scale to
     give consumers better prices and value. Correct?
     MR BOND: Well, I can’t follow where you are.
     ADV BHANA: Do you disagree with that?
     MR BOND: Well, I’m not...
10   ADV BHANA: I don’t have the time to take you to the transcript.
     I’ve taken extract out of the transcript. Your legal team can set me
     right if I’m quoting incorrectly.
     CHAIRPERSON: I think try and take him to the transcript.
     ADV BHANA: Page 119 I’m told.
     MR BOND: Whereabouts on 119, please?
     ADV BHANA: Let me just put a few propositions to you, forgetting
     what the transcript contains. Leveraging arises from three areas. It’s
     process, systems and product, correct?
     MR BOND: Yes, I’m not sure that’s exclusively it, but they are all
20   benefits, yes.
     ADV BHANA: Part of the global procurement is the concept of
     centralised catalogues. Those are the catalogues, which go to all of
     the merchants and buyers in all of the stores. Correct?


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     MR BOND: In the very emerging GMCs, which represent a very low
     percentage of Wal-Mart’s business, we’ve talked about how that does
     happen sometimes, yes, but it’s a very small part of our business at
     the moment.
     ADV BHANA: Alright. Then in relation to catalogues and product
     ranges what I want to ask you is this. Certainly the benefits from
     importing would not be limited to direct imports or imports through
     import agents. Would you accept that?
     MR BOND: Just say that again, please.
10   ADV BHANA: The benefits for say a Massmart store in relation to
     global sourcing on the Wal-Mart basis would arise not only in the
     areas of direct imports and imports through import agents, but also in
     relation to products, which Wal-Mart is able to source and which
     Massmart neither imports directly nor brings in through an import
     agent.
     MR BOND: It would benefit from new products, I guess is your
     point.
     ADV BHANA: Yes.
     MR BOND: Yes.
20   ADV BHANA: And the range of products that Massmart has in its
     global sourcing network is obviously vast and is not simply a
     duplicate or mirror of what Massmart’s product catalogue, if you
     want to call it, would look like at the present moment.


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     MR BOND: There will be products that Wal-Mart sources that
     Massmart didn’t sell, but the selection of the range will be largely
     determined by what customers want to buy and I think, and it’s my
     experience in Massmart, it will be very well sourced. To help giving
     an example on this, ASDA has probably introduced 10 items that are
     new to ASDA because of it being part of Wal-Mart. We’re all very
     well merchandised for us customers beforehand.
     ADV BHANA: Let’s deal with a simple example. Let’s deal with a
     cooking pot made in South Africa by Hendler Hart. Accept that it’s
10   fully manufactured in South Africa and all its components are local
     components. So, it is...
     MR BOND: Sorry, is that your assumption or is that a fact?
     ADV BHANA: Yes, it’s a hypothetical that I’m putting to you. It’s
     not a direct import and it’s clearly not brought in through an import
     agent and say for argument’s sake that pot is procured at a cost of
     R300.00.
     MR BOND: Yes?
     ADV BHANA: Notionally access to Wal-Mart’s sourcing network
     and platforms could indicate a similar, largely identical pot can be
20   sourced in India at a cost of R150.00. Correct for the hypothetical?
     MR BOND: Yes.
     ADV     BHANA:           On       that     scenario        it    will      be     completely
     counterintuitive and contrary to good business sense for Wal-Mart not


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     to import such a pot from India ... sorry, for Massmart not to import
     such a pot from India using Wal-Mart’s procurement systems.
     MR BOND: I response, the first thing is that there will almost
     certainly be a direct import agent already having access to that
     product who could sell that to Massmart today.
     ADV BHANA: No, no, I’m giving you a hypothetical to you.
     MR BOND: I am hypothetically answering.
     ADV BHANA: Don’t complicate the hypothetical. We are dealing
     with a pot that they buy directly from a supplier...
10   MR BOND: The answer then, if you want a simple answer, is no.
     That is not the answer. The answer is that the product from India
     would already be accessible to the retail industry in South Africa
     through a direct import agent. The other thing that I’ve clearly...
     ADV BHANA: Really?
     MR BOND: Yes, it would be.
     ADV BHANA: And that would be across all of the products that form
     part of Wal-Mart’s global sourcing?
     MR BOND: Those that customers want to buy, yes.
     ADV BHANA: So, there is no real benefit to having access to Wal-
20   Mart’s global sourcing platform.
     MR BOND: There is. There are supply chain improvements that I
     continually refer to, cutting out the middleman in Durban or
     wherever...


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     ADV BHANA: But this example doesn’t deal with a middleman here.
     You are saying in all instances the product will probably be available
     in South Africa through a middleman and therefore there is no
     incentive for Massmart to buy through the Wal-Mart procurement
     systems the pot in India from using those systems.
     MR BOND: Forgive me. I’m either not understanding you or you are
     not communicating well. My point is that a R150.00 pot, if
     hypothetically it was available, would already be available to buy.
     Massmart and Grant’s team could buy that at R200.00 today. So, why
10   would the R300.00 product being sold. The hypothetical is purely
     hypothetical, because that just doesn’t work. Your maths don’t work.
     ADV BHANA: Alright, so your answer conceptually is that my
     hypothetical would never arise, because in relation to every product
     on the Wal-Mart global procurement system Massmart in South
     Africa would be able to procure that product at as good a price
     without the benefit of Wal-Mart.
     MR BOND: No.
     ADV BHANA: So, what is your answer?
     MR BOND: My answer is twofold. If that product was available at
20   R150.00, it would be imported at R200.00 and therefore would be
     sold and what Wal-Mart would do is take that R200.00 item and
     make it available at R170.00. That’s the reality of would happen.




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     ADV BHANA: So, central to your assumption is that any import
     agent in South Africa, even if he was buying 100 pots compared to
     Wal-Mart buying 10 000 pots, it can get the same price that Wal-Mart
     can get that product at.
     MR BOND: In the vast majority of cases ... I am being repetitive, but
     I don’t mind doing that, that is my assertion, yes, and what’s more,
     having been a manufacturer for years and worked buying in retail, if it
     has been forced by Wal-Mart and since that is absolutely my
     experience.
10   ADV BHANA: I put it to you it goes against every common sense
     notion one could have that if you are buying 100 units of a product
     and if you are buying 100 000 units of the product, you don’t get a
     better pricing...
     MR BOND: Well, I did premise my answer by saying it’s an
     assumption that the retail is already an optimal scale and in my view
     Massmart is already big enough to be getting a good quality product
     sourced from the right locations.
     ADV BHANA: So, that’s your answer. Chair, I’m really running out
     of time, but there is just one aspect I want to put to Mr Bond. I’ve
20   already gone beyond my allocation, but can you turn to the synergies
     document at page 892? You’ve got the document.
     MR BOND: Sorry, just for clarity, the document is a board of
     directors presentation, if that’s the one you are referring to.


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     ADV BHANA: Yes.
     MR BOND: It’s not specifically a synergies document.
     ADV BHANA: Yes. Now, what we see from page 892 in the
     overview is “following our non-binding expression of interest, Wal-
     Mart has conducted an in-depth due diligence investigation of
     members”. Do you see that?
     MR BOND: Sorry, just repeat.
     ADV BHANA: Under the “executive summary overview” paragraph?
     MR BOND: Yes.
10   ADV BHANA: Right, so this is simply a high level presentation to
     the board, but what we know is that there is an in-depth investigation
     and probably a report, which has the result of that in-depth
     investigation. Correct?
     MR BOND: Correct.
     ADV BHANA: Right. Why has that not been made available to us in
     the discovery process?
     MR BOND: I’m not aware of the process one way or the other, but
     what I can say is now have it in front of you.
     ADV BHANA: Really?
20   MR BOND: That is the document.
     ADV BHANA: Exhibit “C” you say is the in-depth the report
     produced as the result of the in-depth due diligence investigation that
     formed the basis of the document at page 892.


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     MR BOND: Excerpts, not the entirety. You will see that then refers to
     some of the synergies.
     ADV BHANA: Mr Bond, let’s not play with each other. Where is the
     document that has the full report of the due diligence?
     MR BOND: This, as far as I know and I’m aware, you are going to
     have to ask others if you want a different answer, but this is the
     document or an excerpt from the document as far as I’m aware.
     ADV BHANA: Excerpt from which document? Where is the
     document that you took that excerpt from?
10   MR BOND: I don’t know the process of discovery. So, it’s a legal
     question. I’m not aware of what that is from.
     ADV BHANA: Don’t try and hide behind that. You said that you
     signed off on this document. You are aware that it’s an excerpt of
     another document. So, at the very least you must at least be able to
     tell us which document was used to make the extracts from.
     MR BOND: A number of spreadsheets, which were extremely similar
     to the ones that you have in front of you, is the basis on which we’ve
     build the synergies.
     ADV BHANA: Can you produce all of the spreadsheets that you used
20   for Exhibit “C”, as well as all and any reports or documentary
     information that was used to compile the document at page 892?
     MR BOND: I think that’s a legal question. I’m a witness.
     ADV BHANA: No, no, it’s not a legal question.


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     MR BOND: Well, the answer to your question is no, I haven’t got it.
     So, I can’t...
     ADV BHANA: I’m not asking for it now. How long do you need to
     get that?
     MR BOND: I think it’s a legal question as to whether that’s necessary
     and discoverable.
     ADV BHANA: I’m going to ask the Tribunal now then for an order
     that you do so. To enable the Tribunal to decide when you should do
     that, please tell us how long you think it will take to get that
10   information.
     ADV GAUNTLETT: Chair, may I indicate again, as I indicated
     earlier, that the figures in that document are to be found in the
     valuation report behind you in the Wal-Mart discovery, document 95.
     ADV BHANA: Chair, I don’t know why my learned friend is giving
     this evidence when it’s something that he cannot have personal
     knowledge of and the witness should tell us.
     CHAIRPERSON: Well, can you show the witness?
     ADV GAUNTLETT: Chair, the witness was out of this country and
     the witness did not personally discovery the Wal-Mart documents.
20   Unsurprisingly the lawyers did do it.
     CHAIRPERSON: Well, let’s go to that document and let’s see if
     that’s the one.
     ADV BHANA: Can we have the page again, 894?


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     ADV GAUNTLETT: For the third time for the help of our learned
     friends, it is document 95 in the Wal-Mart document, item 3.3 of our
     discovery index, as I have it, Chair.
     ADV BHANA: I’m instructed though that is simply a spreadsheet or
     spreadsheets and it is not a due diligence report. Now, was a due
     diligence report created or not, Mr Bond?
     MR BOND: A due diligence, as far as I’m aware and I’ve got to
     preface it with this, as far as I’m aware there were two elements of the
     due diligence report. One was a synergy set of spreadsheets, which
10   we’ve just referred to and the other was a risk map of the things that
     we found through the due diligence, which is a normal risk map. It’s
     got nothing to do with synergies or anything like that. I’m not aware
     of any other documents.
     ADV BHANA: I’m going to show you what we have as item 95 and I
     want you to tell us if this is what consists in its entirety of the due
     diligence report. That’s the document identified by your counsel.
     MR BOND: Can someone help by telling me where it starts and
     ends?
     ADV BHANA: Well, perhaps your counsel can assist, as he has
20   clearly done until now.
     ADV GAUNTLETT: Chair, as we understand the position of the
     document, which I think is now Exhibit “C”, if you go after that
     introductory page to what is the third unnumbered page of it, the one


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     headed “improved supplier terms”, you will see there is a block under
     the narrative “excerpts from model” and then follows the table and
     further tables over onto the unnumbered fourth and fifth pages, which
     I’m told is taken from the valuation report. It’s got nothing to do with
     due diligence. It’s a valuation report comprising item 95. The due
     diligences are produced higher up in the discovery schedule.
     ADV BHANA: Well, my question was directed to the due diligence
     report. So, I don’t know why my learned friend was referring to these
     spreadsheets. My questions to Mr Bond had been directed to where
10   the due diligence report was that formed the subject matter of the
     document at 892.
     ADV GAUNTLETT: Chair, we are at cross-purposes. We never said
     the due diligence report formed the subject of this. We said four times
     now the valuation report gave rise to this document, which seems to
     have been compared.
     ADV BHANA: My learned friend is at cross-purposes. I’m not
     talking about Exhibit “C” now. I’ve moved on and I’m at the
     document at page 92. I’ve been talking about the synergies document,
     892 of our index. I’ve been talking about what has been called the
20   presentation to the board, what I’ve called the synergies document
     and which referred to an in-depth due diligence investigation. So,
     why we are wasting time on going back to Exhibit “C” I don’t know.
     CHAIRPERSON: Look, can we get this ... sorry Mr Bond.


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     MR BOND: I’m confused about the nomenclature or the language,
     because the due diligence report and the synergies document are two
     different things.
     ADV BHANA: They are two different things.
     MR BOND: As far as I’m aware.
     ADV BHANA: That’s as we understand it.
     MR BOND: Yes.
     ADV BHANA: Now, where is or what is the due diligence report?
     MR BOND: Well, I’m not aware of what process is gone through in
10   terms of discovery. So, I’m not willing to go into the detail of that,
     unless it’s a discovered document.
     ADV BHANA: Oh, you don’t want to show your hand, do you?
     MR BOND: No, come on, I’m not...
     ADV BHANA: Just tell us this, Mr Bond. Forget the discovery
     process. Was there a due diligence report compiled or not?
     MR BOND: I’m not aware of the detail of what is behind that
     comment there. If there was a due diligence process, I’m not aware of
     what report was written.
     ADV BHANA: I’m going to ask you the question again. My question
20   now, this question doesn’t relate to the detail of 892. Was there, as a
     fact, a due diligence report that was compiled or not?
     MR BOND: I’m not aware one way or the other.
     ADV BHANA: You are not aware?


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     MR BOND: I’m not aware if there was...
     ADV BHANA: You are the person that led the negotiating team.
     MR BOND: Yes.
     ADV BHANA: You are the person who reported to the board.
     MR BOND: There was a due diligence process alongside that. I was
     not involved in the detail.
     ADV BHANA: That’s not what I asked you. You are the person that
     reported to the board.
     MR BOND: A group reported to the board, which has a number of
10   people on it and I was not actively involved in the due diligence.
     ADV BHANA: And you can’t tell whether a due diligence report was
     compiled or not.
     MR BOND: I don’t know the detail of what’s behind that.
     ADV BHANA: I put it to you that you are being evasive, because you
     don’t want to reveal the due diligence report.
     MR BOND: That’s merely speculation. I’ve answered accurately and
     honestly. I don’t know.
     ADV BHANA: So, who can tell us whether there is a due diligence
     report?
20   MR BOND: Someone else in Wal-Mart. I’m not quite...
     ADV BHANA: Who? I don’t know how many thousand employees
     there are. You are the person who headed the team.




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     MR BOND: The presentation to the board would have involved one
     of the M&A team.
     ADV BHANA: That’s not what I asked you. Who can we ask at Wal-
     Mart as to whether a due diligence report was completed and whether
     such a report exists?
     MR BOND: Probably the gentleman who was referred to earlier,
     Brian Henry.
     ADV BHANA: And where can he be found?
     MR BOND: In the room.
10   ADV BHANA: So, tomorrow we can ask him about the due diligence
     report.
     MR BOND: I’m assuming that’s good practice, yes.
     ADV BHANA: Alright. Chair, unfortunately I’ve gone way beyond
     my allocation and it’s unfortunately eating into...
     CHAIRPERSON: Well, can we find out if this report exists and that it
     be made available?
     ADV BHANA: Are you prepared to ask...
     ADV GAUNTLETT: Discovery items again, 81 to 93 in the
     discovery, Chair.
20   CHAIRPERSON: Alright, I think let’s adjourn until tomorrow, 10
     o’clock tomorrow morning.




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     Competition Tribunal                  Page 369                         Wal-Mart Stores and
     Case No. 73/LM/Nov10                                                    Massmart Holdings
                                                                                  10 May 2011



     ADV BHANA: Chair, can I be excused? I’m not going to put
     anymore questions now, because I’ve run over the allocation and I
     also have a difficulty tomorrow.
     CHAIRPERSON: Do you want to be excused for tomorrow?
     ADV BHANA: Yes, my junior will be here.
     CHAIRPERSON: Certainly.
     ADV BHANA: Thank you Chair.
     ADV GAUNTLETT: We want to just put on record we’ve got those
     discovery items here. We have Mr Henry in the room and so be it.
10   CHAIRPERSON: If there is a further dispute about this, someone
     from your team will let us know tomorrow. Okay, 10 o’clock
     tomorrow morning.


                                  ADJOURNMENT




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                  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 – 10 May 2011




....................................................        Date: 10 May 2011
Transcriptionists: M Van-Der-Ben
                               A Van-Der-Ben
                               R Mulder




                          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 – 10 May 2011




....................................................   Date: 10 May 2011
Editor: P J Van-Der-Ben

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