The Spar Group is the third retailer to agree to phase out long-term exclusive lease agreements in shopping centres across South Africa.
This follows a consent agreement between the Competition Commission and the Spar Group, confirmed by the Competition Tribunal, aimed at ending these agreements in the grocery retail sector.
Exclusive lease agreements in the grocery sector usually grant a tenant, such as a national supermarket chain, exclusive rights to operate in a specific shopping centre to the exclusion of any other grocery retailers. This means other retailers were not permitted to retail at the malls or should limit the range they sell.
Spar joins Pick n Pay and Shoprite as the third retailer that has agreed to phase out these agreements after the release of the commission’s Grocery Retail Market Inquiry (GRMI) report published in December 2019.
In its GRMI report, the commission concluded that long-term exclusive lease agreements perpetuated concentration levels and impeded participation by smaller and emerging retailers in shopping centres.
Spar to end exclusive lease agreements at malls: Competition Tribunal
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The Spar Group is the third retailer to agree to phase out long-term exclusive lease agreements in shopping centres across South Africa.
This follows a consent agreement between the Competition Commission and the Spar Group, confirmed by the Competition Tribunal, aimed at ending these agreements in the grocery retail sector.
Exclusive lease agreements in the grocery sector usually grant a tenant, such as a national supermarket chain, exclusive rights to operate in a specific shopping centre to the exclusion of any other grocery retailers. This means other retailers were not permitted to retail at the malls or should limit the range they sell.
Spar joins Pick n Pay and Shoprite as the third retailer that has agreed to phase out these agreements after the release of the commission’s Grocery Retail Market Inquiry (GRMI) report published in December 2019.
In its GRMI report, the commission concluded that long-term exclusive lease agreements perpetuated concentration levels and impeded participation by smaller and emerging retailers in shopping centres.
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It also found that the agreements limited consumer choice, thereby giving rise to consumer harm and deprive consumers of dynamism and innovation in the grocery retail sector.
The report recommended that the commission engage retailers to voluntarily stop this practice.
In terms of the agreement, the Spar Group will immediately stop enforcing exclusivity provisions contained in lease agreements between the Spar Group, as the tenant, and a landlord regarding the lease of premises located in a shopping centre in respect of company-owned stores, and will not include exclusivity provisions in lease agreements for company-owned stores in the future.
Company-owned stores refer to stores which are owned and controlled by the Spar Group. These are also referred to as corporate stores.
The agreement said the Spar Group shall endeavour to persuade the Spar Group's 2,000 independently owned stores not to conclude lease agreements which include exclusivity provisions.
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