Here’s why South Africa’s Shoprite is facing a hefty fine

JOHANNESBURG (Reuters) – South Africa’s Competition Commission on Thursday recommended Shoprite’s retail unit, which houses the country’s biggest supermarket chain, be fined 10 percent of its turnover for anti-competitive behaviour.

Shoprite shares fell more than 4 percent after the commission referred it to the country’s Competition Tribunal, which will ultimately decide if the commission’s charges and proposed fine should stand.

The retailer said it would oppose the decision to charge it with anti-competitive behaviour.

The retailer does not disclose turnover for its individual units in its financial statements, but Shoprite Checkers, which includes all of Shoprite’s supermarket brands as well as its liquor, furniture, meat and money businesses, is its biggest money maker.

Overall, Shoprite’s businesses brought in 145.3 billion rand ($10.22 billion) in revenue in 2018.

The case centres on Shoprite Checkers’ event ticket selling subsidiary, Computicket, which was also charged and fined 10 percent of turnover.

The Competition Commission said in a statement Computicket had signed agreements with inventory providers in the entertainment industry that enabled it to discriminate on prices between different-sized customers and served to exclude its competitors.

In a statement, Shoprite said it disagreed with the basis for the referral to the Tribunal.

“Opposing affidavits will be filed by the respondent companies within the required time frames,” Shoprite said referring to the 20 business days within which they can oppose the decision.

Its shares had recovered somewhat to 180.61 rand, a decline of 3.12 percent, by 1354 GMT.

The case marks the second time the commission has referred Computicket to the Competition Tribunal, with a decision on similar charges spanning the period 1999 to December 2012 still pending.

This is the first time that Shoprite has been added as a respondent to the charges, however, with the current case covering the period from January 2013 to present.

($1 = 14.2191 rand)

Editing by James Macharia and Alexandra Hudson

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