Competition Commission publishes draft Terms of Reference for Grocery Retail Sector Market Inquiry

Rachelle Bricout
Rachelle Bricout

On 12 June 2015, the Competition Commission (“Commission”) published its draft Terms of Reference (“ToR”) for the Grocery Retail Sector Market Inquiry in the Government Gazette. The Commission believes that there are features of the grocery retail sector that may prevent, distort or restrict competition.  The Commission has noted that the 4 largest supermarket chains in South Africa account for more than 90% of the market and that since it investigated the issue of long term exclusive leases, it has received complaints about long term exclusive leases between financiers, property developers and supermarket chains presenting a barrier to entry and expansion.

The draft ToR are published for public comment and provide an indication of the scope of the Market Inquiry, which is expected to cover six major areas:

  1. The impact of the expansion, diversification and consolidation of national supermarket chains on small and independent retailers;
  2. The impact of long term exclusive leases on competition in the sector;
  3. The dynamics of competition between local and foreign owned small and independent retailers;
  4. The impact of regulations, including inter alia municipal town planning and by-laws on small and independent retailers;
  5. The impact of buyer groups on small and independent retailers; and
  6. The impact of certain identified value chains on the operations of small and independent retailers.

The full draft ToR are available here: Draft Terms of Reference and public input is invited by 3 July 2015.  In due course a panel of experts will be appointed to carry out the inquiry, targeted meetings will be held with key stakeholders and public hearings will be arranged.

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