Massmart lease hearing unnecessary, retailers inform Competition Tribunal

Makro store in Midrand, Johannesburg.

Picture: Sowetan/Antonio Muchave

The retailer — which owns local brands such as Game, Makro, and Builder’s Warehouse — is attempting to bring action against Spar, Pick n Pay, and Shoprite-Checkers, as well as the South African Property Owners Association. At issue are provisions in lease contracts by these parties, which allegedly block the sale by competitors of certain types of perishable food and dry groceries.

In their arguments, Spar and Shoprite told the tribunal that the matters raised by Massmart were already under investigation through the grocery retail market inquiry.

Anna Annandale SC, representing Spar, said if the tribunal were to hear the matter there would be two parallel processes at play.

"The panel conducting the inquiry will examine the effects — both positive and negative — of long-term lease agreements. This submission (by Massmart) is unnecessary. If the tribunal allows Massmart to exercise its rights now, there is a real danger of far-reaching and unintended consequences. The panel would have finished its work by May next year. A stay of 10 months does away with any of these unintended consequences."

Jeremy Gauntlett SC, representing Shoprite, said Massmart had also failed to meet the requirements for the matter to be heard by the tribunal. "The Competition Act says one has to say in material terms what the complaint is about, which Massmart has failed to do. Massmart has been given a magnificent opportunity through the market inquiry to address the broad issues it has spoken about."

Mike van der Nest SC, representing Massmart, said the agreements had the effect of lessening competition. "The expansion into fresh groceries is being continually constrained by these agreements. A credible sustainable new national player will promote competition, even at a local level."

Massmart first filed a complaint with the competition authorities in September 2014, which the commission refused to investigate. Massmart has now directly approached the tribunal, which has the power to set aside such exclusivity clauses.