The South African Real Estate Investment Trust (SA Reit) Association has called on the Competition Commission to intervene in undesirable exclusivity clauses in retail leases that were allowing retailers to stifle market share.
The association’s members, which included shopping centre owners, alleged that grocery retailers were using these clauses to restrict each other in market share.
Exclusivity clauses in a lease agreement were included by retailers to prevent similar competing businesses from being able to trade at the same shopping centre.
“SA Reit Association is concerned that this push by retailers is driving restrictive business practice and believes it has the responsibility to raise its apprehension over this undesirable situation and will be asking the Competition Commission to turn [its] attention to exclusivity clauses again,” SA Reit said in a statement on Friday.
The association noted that the Commission had considered the “undesirability” of the practice some years ago.
“While not ruling if it considered the behaviour uncompetitive, in each retail acquisition or merger transaction brought to the commission since 2009, it has noted that it’s the new landlord’s or acquiring party’s responsibility to use its best endeavour to negotiate with their supermarket tenants the removal of exclusivity clauses from their leases.”
This left shopping centre owners caught between their contractual obligations with their supermarket tenants and providing a variety of grocery retailers to their customers.