Retailer could be fined 10% of its total revenue for as long as it is in contravention of CompCom recommendations.
Grocery chain Spar has come under fire for failing to comply with the Competition Commission’s recommendations that retailers end exclusivity lease agreements with shopping mall owners.
OBC Better Butchery has lodged a complaint with the Competition Commission, accusing supermarket retailer Spar of "vigorously enforcing exclusivity clauses" against landlords, thus preventing competition (in this case OBC) from setting up shop in certain malls.
If Spar is found guilty, it could be slapped with a multi-million rand fine.
“The matter is currently being investigated. If found guilty, Spar may be liable to pay an administrative penalty of up to 10% of their total revenue calculated for the period of a contravention,”
the Competition Commission spokesperson said.
This week, the retailer reported total revenue of more than R138 billion for its full year to end September.
The complaint
The complaint was lodged on 4 November by OBC managing director Tony Da Fonseca, who said landlords are being prohibited from renting space in their shopping centres to Spar’s competitors.
“While attempting to conclude lease agreements for available space in various shopping centres where Spar is the anchor tenant, the landlords have openly communicated to us that they cannot conclude a lease agreement with us, as Spar is enforcing their exclusivity clause,”
he pointed out.
Da Fonseca said OBC has been blocked from trading in shopping centres such as Hubyeni Shopping Centre in Limpopo, KwaMashu Shopping Centre in KwaZulu-Natal, Gugulethu Square in the Western Cape, and Setsing Plaza in the Free State.
OBC has had a footprint in the Black retail market for over three decades and was one of the first independent chicken and complementary products franchise retailers to set up supermarkets in townships, taxi ranks and rural areas.
“The stifling of local entrepreneurship – be it on any level – has no place in our country and we all need to play a role in making room for a variety of commercial and informal enterprises that cater to our rainbow nation,”
Da Fonseca said.
The Spar Group said it is not aware of any formal or informal complaint, from any national supermarket chain, or from OBC Better Butchery, about being excluded from a retail centre due to the presence of Spar stores.
In 2019, the CompCom released its Grocery Retail Market Inquiry report, following a four-year probe into exclusionary practices in the retail sector.
It found that long-term exclusivity agreements by the big four supermarket chains – Shoprite, Spar, Woolworths and Pick n Pay – were anti-competitive and disadvantaged both smaller stores and consumers.
It recommended that there be an immediate stop to the clauses that prevent small enterprises, speciality stores, and other grocery retailers from entering the market in urban areas.
Sources: Moneyweb, Bizcommunity
