Competition Commission reopens supermarkets investigation

OCTOBER 7, 2014

The Competition Commission has reopened its supermarkets investigation, it announced on Tuesday.

The commission, which is an entity of the Economic Development Department, says it has received a fresh complaint from the South African Property Owners’Association (SAPOA).

“SAPOA has requested the commission to relook at the issue of exclusive clauses in long term lease agreements between owners of large retail shopping centres and retail anchor tenants across the country.

“The property owners’ association alleges that these give rise to considerable competition concerns and could amount to substantial prevention or lessening of competition in violation of the Competition Act,” said commission spokesperson Mava Scott.

However, a full scale investigation has not been set up.

“The commission is currently screening the complaint and will make a determination on whether to launch a full-scale investigation or not,” said Scott.

Earlier this year, the commission concluded its investigation into the exclusive leases, looking at local markets across the country where exclusive leases had been agreed and enforced by the three major supermarket groups (Pick ‘n Pay, Shoprite and Spar).

It found that the anti-competitive effects of the conduct could not be demonstrated conclusively.

“The evidence did not meet the test required in order to prosecute the firms involved and therefore the commission took a decision not to refer the matter to the Tribunal.”

The commission expressed concern about the potential dampening effects of exclusive leases on competition, particularly as they affect small competitors and potential entrants to the market.

In addition to the latest complaint, the commission was already addressing the residual competition concerns arising out of the conduct of the respondents through advocacy engagements with key industry stakeholders, including landlords and supermarkets.

The commission is advocating against the parties entering into long term exclusive agreements as by default for each new development and encourage their use only where justified by the investment made by the supermarket in a particular centre.

The commission has also noted the recent High Court judgment, which has upheld such exclusive lease agreements between Pick ‘n Pay stores and Hyprop, the owner of the Cape Gate Shopping Centre in the Western Cape. –