Spar to stop exclusive lease agreements
Spar has finally joined its fellow grocery retailers Shoprite and Pick n Pay in agreeing to phase out its controversial exclusive lease agreements, reports Fin24.
The Competition Commission yesterday said the Spar Group reached a consent agreement to end the long-term agreements, following a process mediated by former Judge President of the Competition Appeal Court Dennis Davis.
Historically, exclusive long-term lease agreements signed with property developers and other landlords have allowed large retailers to operate exclusively in shopping centres, preventing competitors and smaller independents – including historically disadvantaged individuals – from competing at the same properties.
‘The exclusive lease agreements of Shoprite, Pick n Pay and Spar covered close to 2 000 shopping malls and convenience centres nationally, and excluded any specialist or general grocery supermarkets from competing for consumers in those malls,’ the commission said.
As more than 50% of grocery shopping journeys are to malls and convenience centres, collectively these leases prevented competition for most consumer purchases.
A four-year probe by the Competition Commission culminated in a report in November 2019 that found exclusive lease agreements were prevalent, anti-competitive and harmful to both consumers and smaller retailers.
The commission opted to prioritise getting large retailers to cooperate in this regard rather than immediately choosing litigation to get them to comply.
Pick n Pay and Shoprite had both agreed, though Shoprite later applied to amend its consent agreement, saying it wanted it brought in line with the deal offered to Pick n Pay.
According to Spar's deal, it will ‘not include exclusivity provisions in any new head leases and will cease to enforce exclusivity against all competitors by December 2026’.
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