(Corrects paragraph 9 in May 17 story to attribute quote to a
statement and not Cheadle)
* Watchdog says exclusive mall leases may be
anti-competitive
* Big four retailers accused of blocking rivals
JOHANNESBURG, May 17 (Reuters) - South Africa's competition
watchdog aims to complete an investigation into the grocery
market by the end of May 2017, it said on Tuesday, giving a
progress report on an inquiry that could loosen the grip of its
four main food retailers.
Large retailers Shoprite SHPJ.J , Pick n Pay PIKJ.J , Spar
SPPJ.J and Woolworths WHLJ.J together make up more than 90
percent of the $18 billion a year grocery market. They are
accused of blocking rivals with exclusive shopping mall leases.
The probe, which began in November, came months after
Massmart MSMJ.J , a unit of U.S. company Wal-Mart (NYSE:WMT) WMT.N ,
lodged a complaint with the regulator, saying its expansion
plans were being hampered by the leasing arrangements.
The Competition Commission said the exclusive clauses in
leasing agreements, which can restrict malls from renting out
space to rival food retailers for up to 20 years, could be one
of the features preventing more competition.
"The exclusivity clauses in the lease agreements may be
causing distortion in the grocery retail sector by entrenching
barriers to entry and expansion," said Halton Cheadle, a South
African university professor appointed to head the
investigation.
"A single national grocery retailer operating in a shopping
centre may be in a position to charge higher prices due to lack
of competition."
The Commision would also scrutinise competition between
small informal foreign-owned grocery shop owners and local
stores popularly known as "spazas" after anti-immigrant violence
last year was partly blamed on anger that foreigners were
undercutting local shops.
These foreign shops are owned mostly by people originally
from Somalis, Pakistan or Bangladesh.
"Some of the allegations are that foreign operated retailers
are not registered and do not pay taxes and that they receive
unfair privileges from wholesalers due to shared religious
beliefs, amongst others," the Commission said in a statement.
The small spazas were set up in black suburbs during
apartheid to sell staples such as maize meal because shopping
malls were miles way. The name means hidden in Zulu and reflects
the fact the shops were often clandestine operations during the
time of apartheid.
These informal convenience shops have also suffered since
big retailers rolled into black neighbourhoods, Cheadle said,
adding that his investigation would also look into the impact
of their expansion on jobs and competition.
Upon completion of the inquiry, the regulator could
recommend policy changes to promote competition.