Moneyweb
The Spar Group is the latest grocery retail chain to agree to remove long-term exclusive lease agreement terms at shopping centres, paving the way for greater competition in the local grocery retail market.
The Competition Commission (CompCom) confirmed Spar’s signing of the consent agreement on Wednesday, adding that it will now be submitted to the adjudicator, the Competition Tribunal, for confirmation.
Spar joins its JSE-listed peers Pick n Pay and Shoprite, which have come on board through similar agreements to end the uncompetitive practice by December 2026.
The agreements pave the way for small, medium and micro enterprises (SMMEs) and historically disadvantaged persons (HDP) -owned supermarkets to enter the fray.
The developments come after CompCom released the Grocery Retail Market Inquiry (GRMI) report in 2019, which found that long-term exclusive lease agreements undermined the objectives of the Competition Act and hindered transformation and economic inclusion in the sector.
The report also mentioned the impact the lack of competition in the grocery retail market had on consumers, who were presented with minimal choice at shopping centres where national supermarket chains maintained their dominance.
“The exclusive lease agreements of Shoprite, Pick n Pay and Spar covered close to 2,000 shopping malls and convenience centres nationally, and excluded any specialist or general grocery supermarkets from competing for consumers in those malls,” CompCom said in a statement.
“As more than 50% of grocery shopping journeys are to malls and convenience centres, collectively these leases prevented competition for most consumer purchases.”
Spar’s agreement
Spar’s agreement means that the retailer will stop enforcing exclusivity provisions for company-owned stores with immediate effect, and commit to not including the frowned-upon provisions in future lease agreements.
“In respect of Spar Group head leases for stores owned by Spar retail members, the Spar Group will cease enforcing exclusivity against SMEs, HDP specialist stores and HDP supermarkets with immediate effect,” CompCom said.
“This excludes franchisees of national chains in the first year but covers them thereafter”.
However, the commission noted that Spar will be required to actively persuade its retail members to comply with the agreement’s provisions within a year of signing the agreement.
The commission noted that Spar’s cooperation concludes its work of opening the grocery retail sector to competition and participation by all concerned market players, as intended by the GRMI.
This story first appeared in Moneyweb and is republished with permission.
