Grocery retail inquiry to probe long-term property leases

The second day of hearings by the Competition Commission into the grocery retail sector is expected to resume on Tuesday.

Members of the Competition Commission's executive committee, Nompucuko Nontombana (left), Tembinkosi Bonakele (centre) and Hardin Ratshisusu (right). Picture: @CompComSA/Twitter

DURBAN - The second day of hearings by the Competition Commission into the grocery retail sector is expected to resume on Tuesday.

The presentations are expected to look at the impact of long-term exclusive property leases and how they affect the entry of new players into the market.

This comes after Massmart lodged a complaint claiming that the big four supermarkets enter into agreements with mall owners to block competing tenants from occupying spaces in shopping centres for at least 20 years.

Shoprite, Woolworths, Spar and Pick n’ Pay occupy 90% of the R500 billion grocery retail market.

After visiting Gauteng and Cape Town, the commission has entered the KwaZulu-Natal leg of its inquiry, saying that it believes that there are features in the sector that may be preventing competition and ultimately having a negative impact on the consumer.

The Competition Commission has asked those making presentations to explain why they believe there is a monopoly in the market, the issues around pricing and how the consumer is affected.

On Monday, the inquiry considered the effects of superstore chains moving into townships and how this also impacts on smaller retailers.

So far, the KZN Youth Chamber of Commerce argued on Monday that the entry of both the big four supermarkets and foreign shop owners have destroyed local spaza shop owners’ ability to survive because of the unbeatable low prices.

They have also called for the licenses of these superstores to be reviewed.

On Tuesday, the role of property developers and the lease agreements they enter with grocery retail chains is expected to be explored.

(Edited by Zamangwane Shange)