Shoprite will stop leases that freeze out spazas and small competitors

Shoprite-Checkers has reached an agreement with the Competition Commission that will effectively stop the retailer from enforcing exclusivity provisions in its long-term leases with its landlords against small, medium and micro enterprises (SMMEs) as well as speciality and limited line stores.

This according to a statement issued by the commission which also welcomed the decision made by the Competition Tribunal.

“Exclusivity against other supermarkets will cease immediately in non-urban areas and will be phased out over five years in urban areas,” stated the commission.

“The confirmation of this consent agreement marks a significant milestone in the efforts of the commission against exclusive lease agreements by the national supermarket chains.”

Prior to this agreement, SMMEs and other retailers were unable to access more than 1 000 locations across the country in which Shoprite-Checkers has exclusivity.

This was due to the fact that long-term exclusive lease agreements, entered into between property developers and supermarkets, include provisions that restrict landlords from letting premises in the same shopping centre to potentially competing grocery retailers and speciality stores (these are referred to as exclusivity provisions).

Moving forward, smaller suppliers such as spaza shops, supermarkets, greengrocers and butchers will now have better access to letting space in shopping centres where a Shoprite-owned store is located.

The commission also cautioned, however, that nothing contained in the consent agreement should be considered to amount to or should be taken as an admission of any facts, conduct, liability or wrongdoing on the part of Shoprite.

Due to its status as a franchisor of OK Foods, Shoprite will also comply with the provisions as set out above where it holds the lease of or head lease to a franchisee’s supermarket.

RELATED: Lucas-Bull to replace Wiese at Shoprite 

According to the commission, the consent agreement follows the release of the Grocery Retail Market Inquiry (GRMI) report in November 2019, which found, among others, that long-term exclusive lease agreements were widely prevalent in the grocery retail sector and impeded competition in the sector.

“The GRMI report recommended that the commission must secure voluntary compliance by national supermarket chains with its recommendations concerning long-term exclusive lease agreements,” the commission said.

Following its participation in the work of the GRMI, Shoprite has resolved to agree with the commission concerning its recommendations.

(Compiled by Kaunda Selisho)

For more news your way, download The Citizen’s app for iOS and Android.