Share

Grocery retail probe to widen beyond Big Four

accreditation
The Competition Commission plans to scrutinise the entire retail sector, from street traders to supermalls
The Competition Commission plans to scrutinise the entire retail sector, from street traders to supermalls
Getty Images

Johannesburg - The Competition Commission’s inquiry into grocery retail will delve beyond the Big Four supermarkets and try to address the supposed root of recurring xenophobic violence – the alleged competitive secrets of foreign shopkeepers.

The terms of reference for the commission’s second whack at the grocery retail sector was gazetted on Friday morning, revealing an ambitious attempt to scrutinise the entire retail sector, from street traders to supermalls.

The inquiry is premised on the problem of a disappearing small and informal retail sector in the face of the rise of shopping centres in townships, according to the commission’s background statement in the terms of reference.

In the terms published in the Government Gazette, the commission cites the four major supermarket chains as now controlling 90% of the market.

READ: SA grocery sector faces competition probe

Back in 2009, the commission launched an investigation into the four major supermarket groups, which was eventually pared down to an investigation into the exclusive lease agreements that turn one supermarket into the master of any particular shopping mall.

That investigation was abandoned last year due to a lack of evidence, but now the lease issue is back on the table as part of a far more expansive probe.

The commission also seems interested in supermarket chains’ franchising agreements as franchisees are in effect branches of the franchisor with no discretion in terms of pricing or sourcing stock. The implication is that even though the stores are owned by small companies, they still contribute to the dominance of the company under whose brand they operate.

Much of the new inquiry’s scope is, however, in the contentious terrain of small retailers – formal and informal – who claim they are being displaced by competitors from abroad as much as by malls.

The proposed inquiry seeks to “examine the dynamics of competition between local and foreign-owned small and independent retailers”.

The point is “to understand whether this may contribute to the decline in small and independent retailers in townships, peri-urban areas, rural areas and the informal economy”, seeming to mean that foreign shopkeepers’ conduct is to be investigated.

Foreign-owned shops “have been perceived to be more successful than the others and the reasons therefore are unclear”, read the terms of reference.

The supposed superiority of foreign-born traders is often invoked as one of the major contributors to tensions that have resulted in the looting of foreign shops and mob attacks on foreigners.

The minister of small business development, Lindiwe Zulu, this year drew criticism for saying that foreign shop owners “cannot barricade themselves in and not share their practices with local business owners” in the midst of widespread violence.

The terms of reference specifically mention the “impact of buyer groups” on small retailers.

READ: How Zulu will learn from foreign nationals

According to commission spokesperson Mava Scott, this is a reference to the popular belief that foreign shop owners undercut their local competitors through bulk buying stock as groups.

The inquiry seems to be aimed at, in part, interrogating the myths and common accusations that are thrown around when xenophobia rears its head.

“The small [retail] sector has come to us to say these guys [foreigners] are anti-competitive,” said Scott.

Another common complaint was that foreign-born shopkeepers sold substandard goods, he said.

The inquiry will try to establish if there is anything in these complaints that actually constitutes an offence in terms of competition law.

The concern about malls and foreign competition echoes the long-standing gripes of organised spaza owners in, among other institutions, the National African Federated Chamber of Commerce and Industry (Nafcoc).

Another leg of the inquiry being proposed is the effect of regulations, including bylaws, on traders.

This recalls the disastrous attempts by, among other cities, Johannesburg to “clean” out traders in its central business district through heavy-handed and often illegal means.

The retail inquiry will be the third concurrent market inquiry after the commission received the power to conduct these large-scale investigations in 2013.

The sweeping healthcare inquiry is ongoing with its own offices in Pretoria while the inquiry into the liquid petroleum gas sector is also taking shape.

1. Supermarket expansion into townships

2. Exclusive leases in malls

3. Foreign traders’ competition with locals

4. Regulations and bylaws affecting traders

5. “Buyer groups” in the informal economy

6. The effect of “certain identified value chains”

We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Voting Booth
Do you believe that the various planned marches against load shedding will prompt government to bring solutions and resolve the power crisis?
Please select an option Oops! Something went wrong, please try again later.
Results
Yes
21% - 103 votes
No
79% - 389 votes
Vote