Massmart wins ConCourt bun fight over leases that limit trade
MASSMART’S plan to sell fresh food in its Game stores gained impetus on Friday when the company won an appeal at the Constitutional Court against a 2014 interdict preventing it from doing so.
Pick n Pay had argued that its lease agreement with Hyprop Investments, which owns CapeGate shopping centre in Brackenfell, Cape Town, prevented Game from operating as a general food supermarket.
Massmart’s introduction of fresh and non-perishable food in Game, which is traditionally known for selling domestic electrical appliances, is expected to boost the Walmart-owned retailer’s revenues and optimise the use of space in Game stores in shopping centres nationwide.
“This is an important victory in our effort to undo the historical reliance that entrenched grocery retailers place on leaseexclusivity clauses to limit competition in shopping malls,” said Massmart communication manager Refilwe Boikanyo.
“The judgment will significantly degrade the ability of entrenched
This creates a compelling context as we take our fight to the Competition Tribunal
grocery retailers to rely on contractual and delict arguments to protect their leaseexclusivity arrangements.”
In 2014, in a ruling handed down in the High Court in Pretoria, Judge Johan Louw said Pick n Pay was entitled to a final interdict against Massmart because a clause in its lease prevented Game from combining its general merchandise business with the business of a general food supermarket.
Pick n Pay executive David North said the company would review the Constitutional Court ruling.
In 2014, Massmart lodged a complaint with the Competition Tribunal claiming that its efforts to introduce food for sale in its Game stores had been hindered by agreements between landlords and anchor tenants such as Pick n Pay, Shoprite and Spar.
“[The ruling] creates a compelling context as we take our fight for free and fair competition in the grocery sector to the Competition Tribunal,” Boikanyo said.
In an analyst presentation this month, Massmart said the total fresh food market is worth R84.7billion, with 10% year-on-year growth.
Peter Takaendesa, a portfolio manager at Mergence Investment Managers, said Massmart could devote less space to electrical goods, but whether that would be much more profitable was questionable.
By the end of June, 82 of 139 Game stores offered fresh food.
Massmart’s shares were largely flat at R111.59 by the close of trade on Friday.