According to IOL, the 'big 4' - which own 90% of the market - came under scrutiny when Massmart lodged a complaint with the Commission alleging the retail giants blocked rivals by means of exclusive mall leases. It was argued that some lease agreements could restrict shopping malls from renting space to smaller competitors in the food industry for up to 20 years. This essentially impedes competition by preventing smaller operators from entering the market.
“The purpose of the market inquiry is to examine whether there are features or a combination of features in the grocery retail sector which prevent, distort or restrict competition,” stated Competition Commission spokesperson Sipho Ngwema.
He said that testimony had been received from several small businesses such as butcheries, as well as Gugulethu entrepreneurs representing the MJ Group of Companies and the Gugulethu Liquor Traders Association.
Business Tech reports that the Commission’s inquiry is probing six major problem areas. These include:
The impact of the expansion, diversification and consolidation of national supermarket chains on small and independent retailers;
The impact of long-term exclusive leases on competition in the sector;
The dynamics of competition between local and foreign-owned small and independent retailers;
The impact of regulations, including inter alia municipal town planning and bylaws on small and independent retailers;
The impact of buyer groups on small and independent retailers;
The impact of certain identified value chains on the operations of small and independent retailers.
The Cape Town hearings are due to wrap up on Friday, before moving to Gauteng and KwaZulu-Natal.
Shoprite, Pick n Pay, Spar and Woolworths being investigated by Competition Commission
Competition Commission launches investigation into major retail chains