Retailers: 'Investigate us'

Johannesburg - Retailing giants Pick n Pay and Shoprite said on Tuesday they will welcome any investigation into uncompetitive behaviour in South Africa's food chain.

This response came after the National Agricultural Marketing Council (NAMC) said it will ask the minister of agriculture to request an investigation by the Competition Commission into the dominating relationship retailers maintain with their suppliers.

The University of Pretoria's Professor Johann Kirsten conducted a study in his capacity as a member of NAMC to determine how powerful supermarkets are and if they pose a threat to farmers and food poducers.

Shoprite CEO Whitey Basson said an investigation will give all players, especially consumers, "a clear picture of the situation".

"As far as Shoprite is concerned, we are on the side of our customers and our main concern is to negotiate for the best prices on behalf of the 55 million people who frequent our 1 068 supermarkets annually," Basson said.

Pick n Pay spokesperson Tamra Veley said no one in the retail industry is prepared to be "a price taker". However, she acknowledged that negotiations with suppliers are "extremely robust" and many suppliers have been hit by high input costs with the lag effect still present.

She said there are a few instances where a retailer could refuse to deal with a major supplier on the basis of price alone.

"If any organisation has any evidence whatsoever about collusion in the supply chain, we would urge them to report this to the Competitions Commission immediately."

Farming industry group Agri SA welcomed the proposed investigation.

Agri SA economist Dawie Maree said the retail sector is dominated by a few groups which create an environment for uncompetitive practices. "There are no measures in place to protect farmers from retailers, except for the Competition Act."

Maree said farmers are often accused of causing high food prices, despite the agricultural industry being a price taker. "Price reductions in producer prices are not always passed on to the consumers. In the end consumers pay more, and farmers receive a smaller percentage of the consumer rand."

Not all players in the industry agree that retailers exploit their power.

"Of course retailers are powerful because of their size, but we don't interact with customers (retailers) on the basis of power," said Astral Foods CEO Chris Schutte. "It's a matter of supply and demand. We have a product, they have a good distribution network and at the end of the day what retailers do well is negotiate on behalf of the consumer."

- Fin24.com