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Competition Commission signs agreement with PnP to eliminate exclusive leases

This is in compliance with recommendations of the Grocery Retail Market Inquiry, which among others, highlighted that such agreements between businesses and property managers has an adverse impact on other industry players.

Picture: Picknpay Facebook page.

JOHANNESBURG - The Competition Commission has signed an agreement of consent with retailer Pick n Pay, seeking to eliminate the company's exclusive leases in shopping malls.

This is in compliance with recommendations of the Grocery Retail Market Inquiry, which among others, highlighted that such agreements between businesses and property managers has an adverse impact on other industry players.

- READ: Exclusive lease agreements at SA malls under the spotlight

Recently, another major retailer, Shoprite, agreed to drop the exclusivity clauses in their shopping mall leases in non-urban areas with a long-term plan to do the same in urban areas.

- ALSO READ: Commission welcomes agreement to halt exclusive leases by Shoprite Checkers

The agreement between the Competition Commission and Pick n Pay has been referred to the Competition Tribunal for confirmation.

The Grocery Retail Market Inquiry found, among others, that in the long-term exclusive lease agreements are widely prevalent in the sector, which it said gave rise to customer harm as they limited their choices by reducing competition in shopping centres.

Some property companies have long warned of the effects of the exclusivity clauses, with the Broll Property Group concluding some time ago that the clauses hampered leasing opportunities that could potentially benefit property assets.

The commission said that the agreements prevented the participation of small to medium enterprises and historically disadvantaged people in the sector.

Pick n Pay has undertaken to waive exclusivity against small and independent retailers and against supermarkets owned and controlled by previously disadvantaged people, while they will phase out exclusivity against other chains over the next six years.

In a statement, Competition Commissioner Tembinkosi Bonakele said that the move was a significant step in removing entry barriers and participation of the said groups in the country's retail sector.

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