Pick n Pay: property owners accusing themselves of anti-competitive behaviour? Exclusivity clause saga

Pick n PayAfter many years of signing deals that allow large retailers exclusive rights to trade in shopping malls, South Africa’s property owners have had a change of heart. They no longer want to be tied in to restrictive arrangements with the likes of Pick n Pay, Spar and Shoprite. They have filed a complaint with the Competition Commission, urging an investigation into a practice they say is detrimental to the economy. These clauses mean retailers can limit competition in shopping centres. But Pick n Pay has fought back. It says that the property industry’s trade association is suggesting its members are guilty of anti-competitive behaviour. They entered these agreements freely and have benefited from having stable tenants, is Pick n Pay’s argument. The war is building between shopping centres and retailers. Here’s the full statement from Pick n Pay Stores, with links to latest developments below its comment. There’s a lot at stake for South African retailers, which have the highest return on equity in the world. Tell us what you think of exclusivity clauses, below this article. – JC

 

David North, Director of Strategy and Corporate Affairs, Pick n Pay Stores Ltd:

 

“The Competition Commission examined this issue in great detail and concluded only a few months ago that it would not refer it to the Competition Tribunal.

Exclusivity provisions have long been a feature of South Africa’s retail trade across various sectors ranging from restaurants to movie theatres and the like.

Landlords benefit by securing suitable anchor tenants which helps the landlord to attract other retailers to a particular shopping centre.  Retailers derive some measure of security in terms of likely trade to justify their investment.  Consumers benefit from more shopping centres, more shops and more choice.

It’s important to remember that exclusivity clauses are entered into freely by landlords.  It is therefore puzzling that that their trade association should file a complaint, and in doing so suggest that its own members are engaging in anti-competitive behaviour”.

 

Also read:

Property owners urge Competition Commission action against Pick n Pay, Spar, Shoprite: Neil Gopal

Exclusive leases: Profit pool for big retailers to be emptied

 

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