SA supermarket probed over market abuse

 

 

 

The Competition Authority is investigating a well-known South African chain supermarket, which is accused of abusing its position as Anchor Tenant at the expense of competitors while favouring other SA stores.


The CA acted after it received an alert by one local researcher who raised concerns regarding the matters that he said were in violation of the Competition Act 2009 and thus reducing competition in the retail sector. Apparently the anchor tenant who is in one of the leading malls in Gaborone produced a lease, which had provisions that allowed the Supermarket to easily violate competition laws to its favour and other SA retailers. Apparently the supermarket has within the provisions in the lease ordered the landlord not to permit any other supermarket to operate in the area unless such a supermarket is Woolworths, another SA retailer. Any other supermarket that gets to agree to operate in the mall only when permitted by the controlling tenant shall not exceed a 100 square metres space.

In the lease agreement, the lesser also does not want the landlord to allow any kiosk, shop or outlet selling fish, meat or even bakeries or grocery stores to operate in the mall. According to the researcher, such provisions limit the ability for Batswana to enter business, which not only limits competition but is also not conducive enough for the long term peace and progression of Botswana’s retail sector while prohibiting entry of new retail entrepreneurs. Despite confirming receipt of the complaint and acknowledging that investigations would be opened into the matter, Thula Kaira, Chief Executive of the Competition Authority said that there was nothing special about that case, stating that a normal procedure would be followed to address the matter. Apparently a dispute has emerged between the landlord and other small tenants who feel that since the anchor tenant yields so much power, the landlord is required to keep rents at low levels and to cross-subsidise the SA supermarket with much higher rents being paid by the remaining small tenants.

The same complaints have also emerged between Roman Catholic Diocese and some tenants in the Game City, Commerce Park and Finance Park. In these areas, the Roman Catholic has included in the lease, provisions that do not allow other tenants especially in Commerce Park and Finance Park to operate retail supermarket or restaurants so as to allow the main tenant in Game City to enjoy minimized competition in the area, and prohibit the entry of new retailers.

However Kaira said that the competition watchdog is undertaking a research to find out the dynamics of Botswana’s retail sector and how it operates so as to easily resolve such issues, which he said were complex since they receive many various complaints.

 

 

 

Last modified on Wednesday, 31 July 2013 16:13

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