Thursday, July 7, 2022

Competition Commission to probe Roman Catholic Church

The Roman Catholic Church which owns the biggest commercial area in Gaborone ÔÇô The Gaborone International Commerce Park, Game City Shopping Complex and Kgale Mews – may be investigated by the Competition Commission for breaching provisions of fair business competition.

This follows a complaint lodged by BIDPA’s Professor Roman Grynberg who argues that terms of the lease agreement imposed by the Roman Catholic Church on Commerce Park and Kgale Mews tenants prohibiting them from operating restaurants or any retail outlets was meant to protect the Dioceses investment at Game City and limit competition as provided for under section 27 (1) of the Competition Act.

As evidence, Professor Grynberg provided the competition authority with a lease agreement between the landowner of a plot in Finance Park, Gaborone and the Dioceses which is the landowner. “You will see from provision that the tenant is prohibited from operating a restaurant or any retail outlet on the premises. I have now seen three such leases in the Commerce Park and Finance Park areas and they all contain such provisions. It is my understanding that all the leases contain this provision…… It is my understanding that these provisions were included in the various leases as a condition that the main tenant in the area Game City agreeing to its tenancy. In my view these provisions also constitute an agreement to limit competition as provided under Section 27 (1) of the Competition Act. I believe these provisions in the Lease agreement should be reviewed and struck down as they limit the number of restaurants and retail outlets in a busy commercial area and thereby limit the ability of Batswana to enter the retail sector” wrote Professor Grynberg in his complaint letter.

He suggested that the Competition Authority “as the principal adviser to government on issues pertaining to competition, I feel that it is certainly worth considering that government act on zoning regulations throughout the country and require, rather than prohibit mall owners, to set aside kiosks and stalls for “farmers markets” and other such similar micro enterprise activities that would increase competition in the retail sector.”

Professor Grynberg also asked the authority to investigate price fixing in the petroleum sector. He pointed out that, “at a workshop held for stakeholders in the industry in 2012 by the MMEWR, officials indicated that the price regulation in Botswana only sets the maximum price as opposed to the actual price of petroleum products that can be charged by petrol stations in the country. Yet unlike in other countries there never appears to be any deviation from the regulated price and thus it appears that the regulator has been in effect captured and the maximum price appears to be the actual price. In my view the Competition Authority, pursuant to section 25 (a) of the Competition Act which prohibits horizontal agreements that directly or indirectly fix a selling price, should investigate the retailing of petroleum products in Botswana to determine whether any violations of the Competition Act have occurred. Professor Grynberg also called for the investigation of a lease agreement between a major shopping mall in the north of Gaborone and a South African chain supermarket who is an anchor tenant at the mall.

He says, it would appear that the provisions of the lease agreement limit the ability of the landlord to act in a competitive manner.

“ In particular the provisions of the article of the contract states amongst other things that: Save in respect of the supermarket, the lessor shall not permit the following business to be conducted on the property:- any supermarket; or save for Woolworths unless otherwise agreed by the lessee and ( name of Supermarket) the aggregate square meterage of which exceeds 100 or any business or operation that sells fresh fish or meat, any grocery, fresh fish shop, butchery, bakery fruit or vegetable. No kiosk or structure (save for information kiosk) may be placed or constructed in the shopping centre within a distance of 30 metres of the supermarket’s entrance without the lessee’s prior written approval.”

Professor Grynberg says these provisions are considered by lawyers in Gaborone to be an industry standard for all major malls and also transfer of such lease agreements from South Africa, where the Competition Authority has also investigated the conduct of supermarkets and malls. “Regrettably there has to the best of my knowledge been no changes in the South African or Botswana legislation to limit these sort of provisions.”

He further states that, “it has also come to my attention that directly as a result of the power of the anchor tenant the landlord is required to keep rents at low levels and to cross- subsidise the South African supermarket with much higher rents being paid by the remaining small shops on the premises.”

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