The Competition Commission has fired a shot across the bows of SA’s retail industry, telling the big four supermarket chains – Shoprite, Pick n Pay, Spar, and Woolworths – to immediately stop their entrenched use of long-term exclusive lease agreements at shopping malls to remain competitive and profitable.
This is not the first time that exclusive lease agreements have come under the spotlight. In November 2017, the Constitutional Court denied Pick n Pay an interdict to stop Game from selling fresh food at Capegate Shopping Centre in Cape Town. Pick n Pay initially went to the high court on the basis that Game’s food offering was an unlawful interference in its exclusive lease agreement with Capegate’s owner, Hyprop Investments.
lease agreement with a supermarket chain is necessary as it allows them to secure a large tenant that pays higher rentals for a long period. Meanwhile, supermarket chains have argued that exclusive lease agreements are important to remain competitive at a time when SA’s economy and consumer spending are in the doldrums.
When govt interferes the result will be increased prices