On 30 October 2015, the Competition Commission established the Grocery Retail Sector Market Inquiry (the “Inquiry”) with the purpose to assess amongst others, the impact of long-term lease agreements entered between property developers and national supermarket chains. 4 years on, the Inquiry has published preliminary findings and recommendations.
The Inquiry has reported that certain existing features in the grocery retail sector distort competition between national supermarket chains, wholesalers and independent retailers. In particular, the significant buying power that national supermarket chains wield over property developers and suppliers places them in a strong position to influence the terms of agreements by demanding exclusive leases, low rentals, and rebates which only they qualify for. Chains reviewed by the Inquiry include Shoprite, Pick n Pay, Woolworths, and Spar.