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Supermarkets cleared of price-fixing

Johannesburg - An investigation into SA's major supermarket chains sparked by rising food prices has found that they did not fix prices or abuse their buying power by placing onerous demands on suppliers, the Competition Commission said on Thursday.

The supermarkets - Pick n Pay Stores [JSE:PIK] , Shoprite/Checkers, Woolworths Holdings [JSE:WHL], Spar Group [JSE:SPP], Massmart Holdings [JSE:MSM] and Metcash -  will, however, still be probed for long-term exclusive lease agreements, which the commission says could be anticompetitive and detrimental to smaller supermarkets in certain markets.

As part of this investigation, the commission will "engage" property developers and banks, it said.

The commission said it had concluded the first part of its investigation - relating to food prices, in particular poultry, bread and maize meal, milk, fats, oils and canned fish - but found insufficient evidence to show that supermarkets had abused their buying power, colluded on product placement or exchanged information.

The commission said concerns had been raised regarding demands on suppliers, especially small ones. These included claims that the supermarkets wanted exclusive supply agreements and discounts.

"No evidence was found to suggest that supermarkets were abusing their buyer power in contravention of the Competition Act," the commission said.

While it was concerned about the entry of smaller suppliers to the market, the commission said that larger suppliers "considered their relationship with supermarkets to be equal or tilted toward the retailers".

They were also let off the hook on price collusion.

"The commission could not find evidence of collusion on pricing of the food items it isolated for investigation between the retail chains. These are high volume and low margin items across the retail chains. Supermarkets use low prices on these items to attract consumers on a regular basis," it said.

However, the probe into exclusive lease agreements would continue, it said.

It said exclusive leases in local markets were not justified as this could be anticompetitive and allow supermarkets to dominate in some markets. "Independent and small retailers are excluded from entering certain shopping malls where the main supermarket chains are anchor tenants," the commission said.

 

 

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