Johannesburg - Legal representatives of South Africa’s largest retailers urged the Competition Tribunal to defer hearing a complaint by Massmart that lease exclusivity clauses at malls and shopping centres frustrated Massmart’s expansion plans.
The retailers, Spar, Shoprite and Pick n Pay, yesterday argued that Massmart’s concerns were the focus of the ongoing Competition Commission market inquiry into the grocery retail sector.
During the first day of the tribunal’s hearing on the retailers’ application for the matter to be deferred, David Unterhalter, representing Pick n Pay, criticised Massmart’s application as vague and defective. “It does not set out the facts. It is hard to understand the essential features of the complaint.”
He highlighted the failure to identify affected markets and unsubstantiated claims of dominance, charging that identifying them was a fundamental building block on which the complaint should be based. “The identity of the concerned market is a material fact.”
The hearings follow a complaint to the Competition Commission against the three retailers by Massmart in 2014, which alleged that the leases were uncompetitive. When the commission refused to investigate, Massmart took the matter to the tribunal.
Unclear
Unterhalter said Massmart’s grounds of complaint were unclear. “We have no idea which markets are affected by the restraints,” Unterhalter said.
He said Game claimed to be excluded from certain malls and Massmart did not elaborate on claims that the existence of the exclusivity clauses was a manifestation of dominance. “There is nothing to back that up. It is just a pure assertion without… foundation.”
Unterhalter said Massmart did not provide details on the scope of the restrictions, their duration and effect. He said being an anchor tenant did not equal dominance. “Such a proposition would have to be properly established.”
Appearing for Shoprite, Jeremy Gauntlett said the market inquiry was already dealing with the exclusivity clauses in leases. He criticised the level of detail in Massmart’s complaint describing it as skeletal.
“You have to say, in material terms, what your (complaint) is. Retailers have now been put on a case with no detail and evidence,” he said.
Spar’s advocate, Anna Annandale said a tribunal order on the matter would affect parties such as landlords and wholesalers, who were not part of the case. She said Massmart’s complaint could wait until the inquiry ends in May.
But Mike van der Nest, appearing for Massmart, said their case was sustainable. He said Massmart had not been able to furnish the tribunal with more details because the retailers had refused to share their agreements, which had the exclusivity clauses.
But he said Massmart’s complaint was not as shallow as claimed as the clauses of the leases impeded competition.
“You must accept that,” he said. “A network of exclusivity frustrated Game’s plans to offer fresh produce in its 115 stores. It is a national network. It impedes us from competing.”
He said Massmart was not accusing retailers of colluding. “We are not saying they sit down and agree”, but he said the clauses hampered competition and harmed consumers.
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