S AFRICA: Competition watchdog to probe supermarket sector
The South African Competition Commission has opened an investigation into major supermarket chains Pick 'n Pay, Shoprite/Checkers, Woolworths Holdings and Spar.
The investigation into the retailers, which together account for more than 60% of grocery sales, was prompted by concerns raised by "certain stakeholders" and consumers, the competition watchdog said.
It will also examine the activities of various wholesale retailers, including Massmart and Metcash.
According to the body, exclusive supply arrangements, listing fees, slotting allowances, promotional discounts and late payment policies could suggest that the market is facing a concentration of "buyer power".
Another key issue impacting food manufacturers is the common practice of appointing a "category captain", the commission said.
"Category captains are appointed from the ranks of the largest manufacturer in a particular product category to manage all aspects of that category in retail stores. In other words, one competitor is given the task to manage the placement, promotion and pricing of other competitor's products, on a category-wide basis," the commission explained.
The commission expressed a concern that this method of category management could potentially minimise inter-brand competition because category captains may gain access to sensitive information.
Additionally, the commission said that it is "conserned" that supermarkets could be exchanging price sensitive information, which may have an impact on competition, while long-term exclusive lease agreements could stifle competiion by acting as a barrier to market entry.
"The Commission has made several interventions along the food value chain, from production through to processing. This complaint initiation now aims to uncover whether there are any possible competition concerns arising in the retail space, where consumers would most directly be affected," Commissioner Shan Ramburth said.
The CC will now look at the supermarkets' response to gain a deeper understanding of competition in the sector, a spokesperson for the CC told just-food.
Upon completion of the investigation, the Commission will decide whether or not to send a complaint up to the Competition Tribunal for adjudication, the spokesperson added.
"Ensuring sufficient competition in the food sector is a high priority matter and the investigation will progress with sufficient speed," the spokesperson said.
South African grocer Shoprite has posted a jump in turnover as the group was able to increase its share of the market in the three months to end September....
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