No price fixing found in SA supermarkets

2011-01-28 00:00

AN investigation into South Africa’s major supermarket chains, sparked by rising food prices, has found that they did not fix prices or abuse their buying power by placing onerous demands on suppliers, the Competition Commission said yesterday.

The supermarkets — Pick n Pay Stores, Shoprite/Checkers, Woolworths Holdings, Spar Group, Massmart Holdings and Metcash — will, however, still be investigated for long-term exclusive lease agreements, which the commission says could be anti-competitive and detrimental to smaller supermarkets in certain markets.

As part of this investigation, the commission will “engage” property developers and banks, it said.

The commission said it has finished the first part of its investigation — which relates to food prices, in particular poultry, bread, maize meal, milk, fats, oils and canned fish — but found insufficient evidence to show that the retail chains had abused their buying power, colluded on product placement or exchanged information.

The commission said concerns had been raised with it about the demands on suppliers, especially small ones. These included claims that the supermarkets wanted exclusive supply agreements and discounts.

“No evidence was found to suggest that supermarkets were abusing their buyer power in contravention of the Competition Act,” the commission said.

While it is concerned about the entry of smaller suppliers to the market, the commission said that larger suppliers “considered their relationship with supermarkets to be equal or tilted toward the retailers”.

They were also let off the hook on price collusion.

“The commission could not find evidence of collusion on pricing of the food items it isolated for investigation between the retail chains. These are high-volume and low-margin items across the retail chains. Supermarkets use low prices on these items to attract consumers on a regular basis,” it said. Exclusive leases in local markets are, however, not justified as they could allow supermarkets to dominate in some markets, the commission added. — Fin24.

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