Bat­tle for the malls

CityPress - - Busi­ness - DE­WALD VAN RENS­BURG de­wald.vrens­burg@city­press.co.za

The Com­pe­ti­tion Com­mis­sion’s mar­ket in­quiry into the gro­cery re­tail in­dus­try is now open for what will be a flood of ex­tremely di­verse sub­mis­sions. Mall de­vel­op­ers and gi­ant re­tail­ers, as well as spaza shop­keep­ers, street traders, or­gan­ised im­mi­grant com­mu­ni­ties and mu­nic­i­pal coun­cils all have a stake in what hap­pens.

The man­u­fac­tur­ers of sta­ple foods will also be drawn into the fray af­ter the in­quiry’s panel this week put its “state­ment of is­sues” on the ta­ble.

This is a pre­lim­i­nary list of what the panel thinks should be looked at dur­ing a year­long in­ves­ti­ga­tion, and fleshes out the terms of ref­er­ence pub­lished last year.

All of this is pro­vi­sional, the panel’s chair, Hal­ton Chea­dle, said at a press con­fer­ence this week.

The out­come of the in­quiry will be rec­om­men­da­tions that may af­fect poli­cies and by­laws – and could be­come the ba­sis of pros­e­cu­tions by the com­pe­ti­tion au­thor­i­ties.

It is the com­mis­sion’s fourth mar­ket in­quiry. Two on­go­ing in­quiries are prob­ing the pri­vate health­care and liq­uid pe­tro­leum gas mar­kets, and there has al­ready been one into the bank­ing sec­tor.

THE MALLS

While there is a com­mon­place per­cep­tion that the su­per­mar­kets are killing in­for­mal re­tail in town­ships, the panel this week com­plained that there was an “ap­par­ent lack of clar­ity” about whether this was true.

Of­fi­cial sta­tis­tics say small in­de­pen­dent busi­nesses are be­ing de­stroyed. Other, pri­vate sta­tis­tics say they are mul­ti­ply­ing. The first ob­jec­tive of the panel is to fig­ure out what is hap­pen­ing. Then it will eval­u­ate what the com­pe­ti­tion be­tween su­per­mar­kets and small traders achieves in terms of con­sumer ben­e­fits, as well as em­ploy­ment and busi­ness own­er­ship.

A sec­ond ma­jor ob­jec­tive is to shine a light on the long-stand­ing con­tro­versy over ex­clu­sive lease agree­ments in malls.

This is when a ma­jor su­per­mar­ket in a mall has a lease that bans com­peti­tors in the same mall.

In 2009, an in­ves­ti­ga­tion was launched cov­er­ing some of the same ground, and the ex­clu­siv­ity leases in par­tic­u­lar. That in­ves­ti­ga­tion was aban­doned in 2014. Ac­cord­ing to Chea­dle, the com­plaints around the is­sue have con­tin­ued un­abated.

Last year Game lost an ap­peal in the Supreme Court of Ap­peal stem­ming from its Foodco seg­ment in the Cape Gate mall be­ing squashed by Pick n Pay due to this kind of agree­ment.

The leases are an im­por­tant part of how the gi­ants com­pete against each other – and how smaller play­ers are kept off their ter­rain.

The panel wants to estab­lish how com­mon th­ese leases are, and the ex­tent to which they harm com­peti­tors and con­sumers.

THE PAVE­MENTS

The panel is also meant to in­ves­ti­gate the con­tro­ver­sial claim that often lies at the heart of South Africa’s pe­ri­odic out­bursts of xeno­pho­bic vi­o­lence: the sup­posed un­fair su­pe­ri­or­ity of for­eign traders dis­plac­ing lo­cal shop own­ers.

Asked how this com­mon­place ra­tio­nale for xeno­pho­bic vi­o­lence falls into the scope of com­pe­ti­tion law, pan­el­list Lu­lama Mtanga said that some al­le­ga­tions, such as for­eign traders be­ing “favoured” by some buyer groups, will be looked at.

Fel­low pan­el­list Lumk­ile Mondi added that they were “keen to hear all sub­mis­sions, not just from cit­i­zens”.

The panel will look into why for­eign­ers are “per­ceived to be more suc­cess­ful” than lo­cal traders, as well as what “in­hibits” lo­cals from com­pet­ing.

Mu­nic­i­pal by­laws are also go­ing to be un­der the mi­cro­scope fol­low­ing com­plaints about oner­ous reg­u­la­tions on street traders and the oc­ca­sional heavy-handed po­lice blitzes against them.

THE PRO­DUC­ERS

Out­side the ac­tual re­tail sec­tor, the panel is also in­tent on in­ves­ti­ga­tion the value chains of cer­tain key prod­ucts that make or break small traders.

Th­ese will prob­a­bly in­clude bread, milk, maize, paraf­fin and toi­letries, ac­cord­ing to this week’s state­ment of is­sues.

The com­mon thread will be prod­ucts that make up a ma­jor part of small re­tail­ers’ sales – and prod­ucts that are im­por­tant for the poor to be able to ac­cess.

Be­hav­iour by man­u­fac­tur­ers that af­fect the avail­abil­ity of th­ese things through the small and in­for­mal re­tail sec­tor will be probed.

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