Grocery chain Spar has come under fire for failing to comply with the Competition Commission’s (CompCom) recommendations for retailers to end exclusivity leases with shopping center owners.
CompCom spokeswoman Siyabulela Makunga confirmed to Moneyweb that a complaint had been filed by OBC alleging enforcement of exclusivity clauses in leases. The retailer is now under investigation and could face a multimillion-rand fine if found guilty.
Makunga said Spar failed to comply with the investigation’s recommendation to end exclusivity, leading to the investigation.
“The matter is currently being investigated. If found guilty, Spar may be required to pay an administrative penalty of up to 10% of its total revenue, calculated for the period of an offence,” he said.
This week the retailer reported total revenue of more than R138 million for its full year to the end of September.
However, competitors Shoprite and Pick n Pay have reached an agreement with the commission, Makunga said.
The complaint was filed Nov. 4 by OBC chief executive Tony Da Fonseca, who said landlords are barred from leasing space in their malls to Spar’s competitors.
“When attempting to lease vacant space in various malls where Spar is an anchor tenant, landlords have openly told us that they cannot lease with us as Spar enforces their exclusivity clause,” Da Fonseca said.
He said OBC has been banned from trading at malls such as Hubyeni Mall in Limpopo, KwaMashu Mall in KwaZulu-Natal, Gugulethu Square in the Western Cape and Setsing Plaza in the Free State.
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The Spar Group is not aware of any formal or informal complaint from a national supermarket chain or from OBC Better Butchery about being ejected from a retail center due to the presence of Spar stores.
“The Spar Group has six distribution centers serving more than 2,000 stores in South Africa,” the retailer told Moneyweb.
“We always negotiate leases that ensure stores are future-proof over the long term.”
In 2019, CompCom released its grocery retail market investigation report after four years of investigating retail foreclosure practices.
It found that long-term exclusivity agreements by the big four supermarket chains – Shoprite, Spar, Woolworths and Pick n Pay – were anti-competitive and disadvantaged both smaller shops and consumers.
It recommended that the clauses barring small businesses, specialty stores and other food retailers from entering the market in urban areas should be scrapped immediately.
This article originally appeared on Moneyweb and has been republished with permission.
Read the original article here.