Massmart calls for an end to lease exclusivity clauses - CNBC Africa

Massmart calls for an end to lease exclusivity clauses

Southern Africa

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Massmart calls for an end to lease exclusivity clauses. PHOTOS:

The South African firm [DATA MSM:Massmart Holdings LTD.] has lodged its complaint against giant supermarket chains Pick n Pay and Shoprite, stating that the exclusive lease agreements are intuitively anti-competitive and prevent it from developing an offering that can compete with these national retail chains.

(READ MORE: Shoprite sues Massmart in exclusivity battle)

 “These clauses have the effect of enabling an entrenched clutch of anchor retailers to decide who they will compete against in malls,” said Massmart in a statement.

“Sadly, the traditional reliance placed on exclusivity clauses, by anchor retailers, appears to have created a form of ‘contractual entitlement’ – it’s an easy option that enables the entrenched anchor retailers to contract out of competition with new entrants."

In its submission to the Commission, Massmart said customers have welcomed the introduction of fresh foods into certain Game stores which has resulted in higher sales and sales density growth, compared to those Game stores that do not have the fresh food offering.

“The restrictions on Game reduce the competitive threat Game poses to the entrenched anchor retailers thereby reducing their incentive to improve their consumer offering.”

(READ MORE: Competition Commission to assess supermarkets investigation)

Massmart said that it’s confident it has a compelling case which will undermine anchor retailers’ reliance on exclusivity clauses that reduce competition in shopping malls.

The firm also added that it is open to collaborating closely with the Commission in their investigation.