No further competition authority action on long-term supermarket leases

Posted On Monday, 27 January 2014 06:49 Published by
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Competition Commission confirms that it has concluded its investigation into long-term supermarket lease agreements and their anti-competitive effects.

Petra KruscheThe Competition Commission confirmed on Friday that it had concluded its investigation into long-term supermarket lease agreements and their anti-competitive effects‚ and that it would not refer the matter for prosecution before the Competition Tribunal.

In 2011‚ the commission completed part of its investigation that started in 2009 against four major supermarkets — Pick n Pay (PIK)‚ Shoprite/Checkers (SHP)‚ Woolworths (WHL) and Spar (SPP) — as well as wholesale retailers Massmart (MSM) and Metcash. The probe related to information exchange‚ abuse of buyer power‚ category management and exclusive lease arrangements.

At the time‚ in 2011‚ the commission said the exclusive arrangements could result in anti-competitive effects where the chains had market power within their local markets. It decided to continue its investigations in an effort to find a constructive solution‚ given the fact that such exclusive leases were an industry-wide practice. The commission said on Friday that it found that the practice of exclusive lease agreements raised barriers to entry into grocery retailing. However‚ the investigation did not find sufficient evidence to meet the tests set out in the Competition Act for demonstrating anti-competitive effects. “The commission’s preliminary views were that long-term exclusive lease agreements could give rise to considerable competition concerns and could amount to practices that restrict or exclude or impede competition‚” the commission said.

“The commission’s concerns included the exclusionary effect of the conduct on competition and the heightening of entry barriers for smaller and independent firms such as Fruit & Veg City that also laid a complaint with the commission regarding the same conduct.” However‚ it would not be prosecuting the matter any further. Petra Krusche‚ a director in the competition practice of law firm Cliffe Dekker Hofmeyr‚ said in a statement on Friday afternoon that the use of limitation terms in supermarket anchor leases in shopping malls had been investigated for the past four years.

Last modified on Monday, 27 January 2014 07:04

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