CA Probes Shopping Malls
Keikantse Lesemela | Monday February 3, 2014 15:33
CA Probes Shopping Malls
Keikantse Lesemela
Correspondent
T
he Competition Authority (CA) is investigating a pattern of exclusive agreements between anchor tenants and landlords in the country's flourishing shopping malls. The agreements are deemed illegal and promoting anti-competitive practices in the retail industry. In a statement released this week, CA communications and advocacy director, Gideon Nkala said they have been inundated with complaints from businesspeople about the exclusive agreements. The complainants say anchor tenants have used the agreements to bar competitors from setting up shop in malls.
The CA has discovered that specialist stores selling liquor, fruits, vegetables and grocery are excluded in shopping malls where the main supermarket chains are the anchor tenants. The exclusive agreements have been found to have the effect of denying consumers an opportunity to choose between different retailers within the same market. 'While the glittering shopping malls that open up in towns and villages are celebrated for changing the landscape of our towns, they could be used to promote some deep seated anti-competitive conduct in the market place.
'The practice at some of these big malls, it has been alleged, is that landlords woo big name companies that will attract a lot of consumers to the malls. The reality is that the big brand names do not come cheap; they usually impose conditions built in the lease agreement to ensure that the anchor tenant is insulated from competition. A national market inquiry will be undertaken by the Authority to address the anti-competitive effects of exclusive agreements,' said Nkala.
He was equally concerned with long term exclusive leases which have restrictive clauses, as they may amount to a contravention of the Competition Act, particularly where supermarkets have market power, within the relevant local market.
'The authority, in its inquiry, noted that, supermarket chains and property developers enter into, and enforce long-term exclusive lease agreements through anchor tenancy, to the exclusion of potential competitors at the retail level.'This conduct also raises barriers to entry at the retail level, as competitors are excluded from entering the shopping mall where a particular anchor tenant is present,' he explained.
In one of the shopping malls in Botswana, Nkala said they received a complaint from a landlord against an anchor tenant (supermarket) with respect to an exclusive lease agreement, containing clauses deemed to be anti-competition.
Due to the authority's intervention, the parties concerned agreed to remove the restrictive clauses, which were creating a barrier to entry into the shopping mall. 'The removal of the barrier to entry has since resulted in competitors entering the shopping mall and an anticipated increase in new entrants. We appeal to current and future mall developers to ensure that anti-competitive clauses like the anchor - tenancy clause are removed to promote fair competition for all,' said Nkala.
The agreements are deemed illegal and promoting anti-competitive practices in the retail industry. In a statement released this week, CA communications and advocacy director, Gideon Nkala said they have been inundated with complaints from businesspeople about the exclusive agreements.
The complainants say anchor tenants have used the agreements to bar competitors from setting up shop in malls. The CA has discovered that specialist stores selling liquor, fruits, vegetables and grocery are excluded in shopping malls where the main supermarket chains are the anchor tenants. The exclusive agreements have been found to have the effect of denying consumers an opportunity to choose between different retailers within the same market. 'While the glittering shopping malls that open up in towns and villages are celebrated for changing the landscape of our towns, they could be used to promote some deep seated anti-competitive conduct in the market place. 'The practice at some of these big malls, it has been alleged, is that landlords woo big name companies that will attract a lot of consumers to the malls.
The reality is that the big brand names do not come cheap; they usually impose conditions built in the lease agreement to ensure that the anchor tenant is insulated from competition. A national market inquiry will be undertaken by the Authority to address the anti-competitive effects of exclusive agreements,' said Nkala. He was equally concerned with long term exclusive leases which have restrictive clauses, as they may amount to a contravention of the Competition Act, particularly where supermarkets have market power, within the relevant local market. 'The authority, in its inquiry, noted that, supermarket chains and property developers enter into, and enforce long-term exclusive lease agreements through anchor tenancy, to the exclusion of potential competitors at the retail level.
'This conduct also raises barriers to entry at the retail level, as competitors are excluded from entering the shopping mall where a particular anchor tenant is present,' he explained.In one of the shopping malls in Botswana, Nkala said they received a complaint from a landlord against an anchor tenant (supermarket) with respect to an exclusive lease agreement, containing clauses deemed to be anti-competition.Due to the authority's intervention, the parties concerned agreed to remove the restrictive clauses, which were creating a barrier to entry into the shopping mall.
'The removal of the barrier to entry has since resulted in competitors entering the shopping mall and an anticipated increase in new entrants. We appeal to current and future mall developers to ensure that anti-competitive clauses like the anchor - tenancy clause are removed to promote fair competition for all,' said Nkala.