04 Nov 2015

Competition Law - Latest News

by Jennifer Finnigan, Partner, Durban,

On Friday, 30 October 2015, the Competition Commission published its final Terms of Reference ("TOR") for its grocery retail sector market inquiry.  The inquiry applies to all shops that sell mainly fast moving consumer goods, from street traders, hawkers, spaza shops, small independent grocery shops to supermarket chains and wholesalers. The points for concern identified in the TOR are much the same as those listed in the draft TOR published in June this year. The Commission’s major concern is the concentration of 90% of the market share in the retail grocery sector in the hands of the 4 big supermarket chains and the impact of the supermarket nationals on the informal grocery retail sector.  Exclusivity clauses in leases make another guest appearance on the list of issues being investigated and the Commission mentions a slew of complaints received since its original investigation of this concern to justify investigating this issue once again.  While the final TOR are less explicit about xenophobia and how it impacts on competition between local and foreign owned retailers than the draft TOR, the issue is still on the table.  The impact of regulation, buyer groups and “certain identified value chains” (to be identified by the inquiry as it goes along) on small and independent retailers are also included in the TOR.  What is clear is that the scope of the inquiry is very much a work in progress and is likely to vary as it progresses.  Beginning on 27 November this year, the inquiry is hoping to finish its work by May 2017.  Market participants would do well to tread carefully.  Market inquiries may well lead to Commission investigations.