COMPETITION TRIBUNAL ENDS MASSMART EXCLUSIVE LEASE SAGA

Author: Misha van Niekerk

The Massmart exclusive lease saga, which commenced with Massmart’s complaint to the Competition Commission (“the Commission”) in October 2014, has finally come to an end.

The Competition Tribunal (“the Tribunal”) yesterday upheld exceptions brought by Pick ‘n Pay, Shoprite Checkers and Spar (“the Excipients”) and dismissed Massmart’s complaint that the Excipients’ exclusive lease agreements with various shopping malls were anti-competitive and falls foul of the prohibition on restrictive vertical practices contained in Section 5(1) of the Competition Act 89 of 1998 (“the Act”).

Massmart initially self-referred the complaint to the Tribunal in 2015, following the Commission’s non-referral of Massmart’s 2014 complaint – the Commission put forth its decision to institute an enquiry into the grocery retail sector as the reason for the non-referral. A number of exceptions were raised to this first referral and Massmart was granted an opportunity to amend. Massmart’s amended referral was again the subject of a number of exceptions which were heard by the Tribunal on the 19^th of September 2017 and resulted in the complaint finally being dismissed yesterday.

The common thread running through all the exceptions raised was the fact that Massmart’s complaint failed to make out a cause of action in respect of Section 5(1) of the Act – not only did Massmart fail to define the markets with sufficient particularity, it also failed to sufficiently demonstrate an anti-competitive effect. In this regard, the Tribunal stated that the “fact that Game is excluded from malls does not equate to an exclusion of competition if another rival is present…Mere proof of exclusion of a particular competitor does not suffice.”

The Tribunal’s approach to exclusive lease agreements as demonstrated in this case, can be summed up by its statement that a “complainant needs to allege more than the existence of a contractual restraint.”

by Misha van Niekerk | Associate