Massmart’s Referral To The Competition Tribunal Dismissed

14 February 2018|In Competition Briefs eBriefs Nortons Inc News NortonsInc

Massmart’s Referral To The Competition Tribunal Dismissed

In 2014, Massmart filed a complaint with the Competition Commission in terms of sections 5(1) and 8 of the Competition Act alleging that leases between Pick n Pay, Shoprite Checkers and Spar, respectively, and their landlords (the owners of shopping malls), were anti-competitive on the basis that they contained exclusivity provisions preventing other grocers from entering the shopping malls. Massmart referred its complaint to the Tribunal after the Commission non-referred the matter in 2015, citing as its reason that it had decided to conduct a market inquiry into the grocery retail sector.

Massmart argued that the exclusivity provisions in the lease agreements gave Pick n Pay, Shoprite Checkers and Spar protection in the supply of groceries in the respective shopping malls and excluded competitors from entering the malls resulting in an impact on consumer choice and price and therefore negatively affecting consumers.

Pick n Pay, Shoprite Checkers and Spar all filed exceptions to Massmart’s complaint.  The exceptions raised by the three retailers included the following:

  1. That Massmart’s referral was not sufficiently aligned to its complaint and thus constituted a new referral in violation of the so-called referral rule.
  2. That Massmart had failed to join the relevant landlords.
  3. Pick ‘n Pay argued that the relief sought by Massmart was not competent in law in that the retailers could not enforce the terms of the exclusive lease agreements against Massmart, only the respective landlords could do so.
  4. That Massmart had failed to make out a cause of action.
  5. That Massmart’s pleadings lacked sufficient material facts in that it had not properly defined the relevant market.

The Tribunal concluded that Massmart had failed to plead a clear market definition. Furthermore, it held that a complaint needs to allege more than the existence of a contractual restraint. The Tribunal has previously held that actual evidence of harm to consumer welfare would suffice where market definition may be imprecise but that Massmart had not pleaded sufficient harm.

The Tribunal held that Massmart had been given an extensive amount of time to remedy the problems identified in its referral following a previous round of exceptions filed by the three retailers against whom the complaint was made. The referral was therefore dismissed and the exceptions raised by Pick n Pay, Shoprite Checkers and Spar were upheld.

Nortons represented Pick ‘n Pay Retailers (Pty) Ltd.