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The gradual elimination of exclusivity will mean giving up this clause as the leases are renewed and Shoprite will not sign any new lease that contains exclusivity clauses.
A Shoprite store. Image: supplied.
JOHANNESBURG – Shoprite Holdings joined Pick n Pay on Wednesday in agreeing to drop exclusivity clauses on shopping center leases against small, specialty retailers with immediate effect.
The Shoprite supermarket chain will also immediately cease exclusivity against other supermarkets in non-urban areas and will eliminate exclusivity for five years in urban areas, the Competition Commission said in a statement on Wednesday.
The agreement with the Competition Commission follows the findings of a Grocery Retail Market Investigation published in November, which found that the exclusive lease clauses contained in various lease agreements impeded competition in the local grocery retail sector.
The investigation also found that there were no compelling justifications for the continued existence of these exclusive leases.
Shoprite confirmed that it had signed the agreement with the Commission.
Gradual removal of exclusivity will mean waiving this clause as leases are renewed and Shoprite will not sign any new lease that contains exclusivity clauses.
The deal applies to all Shoprite brands including Checkers luxury grocery chain, low-budget grocery store Usave and franchise business OK Foods.
When Shoprite has the lease on behalf of a franchisee, the agreement will be implemented immediately and within a 12-month period, if the franchisees maintain the lease, the Commission said.
The agreement has been forwarded to the Competition Court, which makes the final decision, to be confirmed as an order.
“The Commission welcomes this development which will see the introduction of much-needed competition in South Africa’s grocery retail sector, and will end an area of concern that the Commission has raised for almost ten years,” said the Commissioner for Competition. , Tembinkosi Bonakele.
“This move by Shoprite Checkers is timely considering the devastating impact of the coronavirus pandemic on the South African economy in general, and specifically on the retail and retail property sectors.”
On Tuesday, Pick n Pay chairman Gareth Ackerman announced in the company’s annual earnings release that the grocery retailer would not seek to enforce any exclusivity clause and would seek to finalize its deal with the Commission.
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