Page 7 - SAPOA Property News - Volume 1

COMPETITION COMMISSION GROCERY RETAIL MARKET INQUIRY
Our high-level summary and key take away points from the call are as follows:
EXCLUSIVE LEASES
• The CC was hoping to make
an an announcement which they hoped would allay the concerns of SAPOA members regarding retailers insisting on exclusive leases Since this meeting the CC has published a a a media statement noting that Shoprite Checkers has agreed to halt enforcing exclusive leases with immediate effect We understand the the CC is working with other major retailers to obtain the same undertakings • The CC is still trying to figure out how to deal with cases where franchisees are tenants The provisions of lease are therefore outside of the franchisor’s hands • Where retailers continue to insist on exclusive leases the CC stated that it will prosecute RENTAL RATES
• The CC is not trying to regulate rentals and does not have the capacity to do so but this will be achieved through the proposed Code • The objective of the Code is to set out some transparent criteria which help to avoid the worst abuses of negotiating power by landlords (and leaving the majority of negotiations unaffected) The Code should prevent high and unfair rentals from being a a barrier to entry for small firms • The CC recognises that the Code should build in sufficient discretion for landlords when negotiating rentals within the bounds of fairness • The Code should also be framed in such a a way:
» which recognises the need to incentivise investment » to protect SAPOA members from abuse of negotiating power by strong tenants • The facilitator envisages that the Code should set out a simple understandable and and agreed set of principles • The facilitator recognises that discrimination between tenants would be justifiable under the Code Especially between tenants within different categories However the Code should ensure equitable treatment within categories of tenants The CC agreed with the facilitator on this point • Overall the process is still at the the beginning and there are a number of other issues to consider including:
» The impact of Covid-19 on the industry and whether this has an impact on what measures should be taken and at at what stage » Whether there should be a “phased-in” implementation of the Code » How to deal with enforcement against non-compliance » How to ensure all landlords and retailers are heard including those who are not members of SAPOA We have established a a a a a a working group who will prepare a a a a a a draft proposed Code which we intend submitting to the CC in in in due course SAPOA PROPERTY NEWS
7