Pick n Pay to allow competing small businesses to trade alongside it in malls

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Pick n Pay has agreed to immediately allow all small businesses, as well as black-owned supermarkets, to trade in malls where it has exclusivity agreements.
Pick n Pay has agreed to immediately allow all small businesses, as well as black-owned supermarkets, to trade in malls where it has exclusivity agreements.
  • For many years, SA's supermarket giants have kept competitors – including small butchers and bakers - out of shopping centres by including "exclusivity" agreements in their leases with mall owners.
  • Pick n Pay has now agreed to immediately allow all small businesses, as well as black-owned supermarkets, to trade in malls where it has these agreements.
  • Shoprite last year agreed to allow small businesses in malls, and competitor supermarkets in non-urban shopping malls.

Any black-owned supermarket, small business and speciality store that was previously excluded from doing business in a shopping mall because Pick n Pay had an "exclusivity" provision in its lease with the landlord, will now be able to set up shop.

This follows a consent agreement between Pick n Pay and the Competition Tribunal. The competition authorities have objected against the large supermarket giants' practice of concluding agreements with mall owners that ban competitors from the malls. These contracts sometimes span up to 25 years. This meant that not only other supermarkets, but also small food providers such as bakers and butchers were not allowed to trade.

Last year, Shoprite agreed with the tribunal that it would also immediately allow small businesses to set up shop in malls where it had exclusivity agreements. Also, in non-urban areas, it agreed that other supermarkets could start trading alongside its stores.

READ | Competition authority confirms end to Shoprite's exclusive lease agreements

Pick n Pay will only allow black-owned supermarkets – but in all its malls, including in urban areas.

"The … supermarkets can be single or multiple store operations as long as they are privately owned and controlled by historically disadvantaged persons, including individual franchisees or buyer group members of other national retail brands but excluding corporate stores of those brands," the tribunal said.

Small or medium-sized businesses (as defined in the Competition Act) and speciality stores (including butcheries, bakeries, delicatessens, liquor stores and greengrocers, or stores that sell 15 or fewer product lines) can also immediately trade in shopping malls where it has exclusivity agreements.

Pick n Pay also agreed that it won’t have any exclusivity provisions in new lease agreements (as opposed to renewal agreements) – and all exclusivity provisions against other supermarkets contained in its existing leases cannot be enforced after 31 December 2026. The consent agreement also applies to Pick n Pay's franchisees.

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