Competition Commission concludes exclusive-lease investigation without taking action

John Oxenham, Nortons Inc.

The South African Competition Commission (“Commission”) has recently announced that it has concluded its investigation into the major retail grocery stores, namely Shoprite Holdings Ltd, Woolworths Holdings Ltd, the Spar Group Ltd and Pick ‘n Pay Stores Ltd, as well as wholesale retailers, Massmart Holding Ltd and Metcash Trading Africa (Pty) Ltd for alleged contraventions of the Competition Act in relation to exclusive lease agreements.

By way of factual background, the Commission initiated an investigation in 2009 against Shoprite, Woolworths, Spar, Massmart, Metcash and Pick ‘n Pay in which the Commission  examined various competition concerns including buyer power, category management, information exchange and long-term exclusive lease agreements. The Commission’s initial investigation uncovered no evidence of competition contraventions, yet subsequently the Commission decided to focus its investigation on the long-term exclusive lease agreements, evaluating whether they could potentially give rise to contraventions of abuse of dominance and restrictive vertical practices.

The Commission’s investigation failed to find sufficient evidence to meet the tests set out in the Competition Act to proceed with the investigation. As a result, the Commission has decided not to refer the matter to the Competition Tribunal, concluding that “on the basis of the evidence before the commission, the anti-competitive effects of the conduct could not be demonstrated conclusively.“