South Africa: Big supermarkets told to drop exclusivity clauses

South Africa’s biggest supermarket chains could be forced to drop exclusivity clauses in shopping mall leases if they fail to do so voluntarily, the country’s competition watchdog stated in findings from a sector inquiry published on Monday, November 25. 

The grocery retail market inquiry was initiated in November 2015 to deepen understanding of a sector dominated by Shoprite Holdings and its chain Checkers, Pick n Pay Stores, Spar Group, and Woolworths Holdings. 

The inquiry found “features in the South African grocery retail sector that may prevent, distort or restrict competition,” inquiry chairman Halton Cheadle said as the final more than 600-page report was unveiled on Monday.

Among those features are exclusive leases and tenant mix clauses negotiated by the major chains in shopping malls across the country to deny opportunities for specialist, emerging chains and small, medium, and micro-enterprises (SMME) in areas where the majority of consumers do their weekly and monthly shopping. 

“Of even greater concern, these agreements also systematically deny the opportunity for specialist stores and independent entrepreneurs to locate in the mall if they compete with any of the national chains’ product lines,” Cheadle said, quoting the report.

Full Content: Reuters

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