On 15 June 2015, we sent out a newsletter about the draft terms of reference that had been published by the Competition Commission for an inquiry into the general state of competition in the grocery retail sector, in regard to which the Commission had called for public comment.  The Commission has now finalised and published the terms of reference for the inquiry.  The scope of the inquiry will include the following:

  • The impact of the expansion, diversification and consolidation of national supermarket chains on small and independent retailers. 
  • The impact of long-term exclusive leases between property developers and national supermarket chains, and the role of financiers in these agreements.
  • The dynamics of competition between local and foreign national operated small and independent retailers.
  • The impact of regulations, including municipal town planning and by laws on small and independent retailers.
  • The impact of buyer groups on small and independent retailers. 
  • The impact of certain identified value chains on the operation of small and independent retailers.

The inquiry may also probe, among other things:

  • The competition dynamics in the sector, including pricing practices, the extent of consumer choice and innovation.
  • The impact of franchise retailers on small and independent retailers.
  • The causes and impact of the decline in small and independent retailers.
  • Other issues of public interest and consumer harm in the grocery retail sector.

The Commission has defined the grocery retail sector as including all shops that predominantly sell fast moving consumer goods whether as wholesalers, retailers or both, including small informal businesses such as street traders/hawkers, spaza shops and small independent grocery stores, as well as supermarket chains and wholesale groups and outlets.  Although not limited to these areas, the inquiry will focus on the sector in townships, peri-urban and rural areas and the informal economy.  

The participants in the market inquiry process will include firms directly or indirectly involved in the grocery retail sector, as well as those that have an impact on competition in the sector.  These include firms in the property market, finance institutions and suppliers, as well as business and trade associations, public entities, regulatory authorities, consumers and consumer groups.

The inquiry is due to commence on 27 November 2015 with a view to being completed by 29 May 2017.