Retailers lose bid to delay Massmart exclusivity complaint

Cape Town - The Competition Tribunal announced on Friday that it has rejected the bid of a group of retailers to delay a hearing into an application brought by Massmart [JSE:MSM] objecting to exclusivity in lease agreements concerning its Game stores.

The local unit of Wal-Mart Stores wants to enter the fresh grocery products market through its Game store chain, but is unable to do so because of these agreements between grocers Shoprite [JSE:SHP], Pick n Pay [JSE:PIK], Spar [JSE:SPP] and shopping mall landlords.

The exclusive leases prevent another chain from selling fresh grocery products and can last anywhere from five to 20 years, according to Massmart, known for its Makro chain of wholesale stores. "The company is of the opinion that exclusive lease agreements are intuitively anti-competitive and prevent it from developing an offering that can compete effectively with the entrenched, national retail chains," Massmart previously said in a statement.

Massmart launched a complaint with the Competition Commission on October 31 2014 against the group of retailers about the exclusivity agreements. In November that same year, the commission said it would  incorporate the complaint with other similar complaints that were then being investigated, and conduct more investigations.

The Competition Tribunal ruled on Friday that Massmart had a right to bring its case to the tribunal, but said it has to give more substance to its case against the three retailers. It said Massmart needs to provide greater clarity about the type of market in question and the consequence of the anticompetitive effects. The tribunal gave Massmart 40 business days from September 1 do this.

Massmart lodged the case with the tribunal after the Competition Commission later rejected its complaint, on the grounds that it is conducting a market inquiry into the grocery sector. Massmart argues, among other things, that this inquiry will focus more on small and independent retailers in townships, peri-urban and rural areas rather than a big chain store such as itself.