Sunday, February 28, 2021

Days of exclusive agreements at shopping malls may be numbered

With the Competition Authority officials barnstorming the country to assess the state, nature and form of competition in shopping malls and on the basis of precedent, the outcome may be the prohibition of exclusive agreements between mall owners and anchor tenants.
In terms of these agreements, anchor tenants are given monopoly for the trade of certain goods and services. For example, an anchor tenant can be given exclusive rights to sell bread in a mall thereby making it impossible for any other trader to set up a confectionery within such mall.
In the latest issue of its Competition Bulletin, the Authority makes particular mention of a case at Molapo Crossing mall in Gaborone where exclusivity agreement between the shopping mall owner and the anchor tenant was deemed to be anti-competitive.
“The Molapo Crossing inquiry indicated the existence of an exclusive agreement between the shopping mall owner and the anchor tenant, Pick n’ Pay, which restricted free competition within the mall by foreclosing the upstream market and eliminating effective access of actual or potential competitors. This created a barrier to entry for any competitor who would have wished to enter the said market and possibly compete with the anchor tenant. Following the removal of these provisions upon the Authority’s intervention, that specific market was opened up to free and fair competition,” the Competition Bulletin says.
The Molapo case prompted the Authority “to conduct a nationwide inquiry into the retail property market, to ascertain how agreements relating to leasing of space are done, as per section 49 of the Competition Act.” The latter provides that where the Authority has reason to suspect that, in the light of observed price rigidities or other circumstances, a restriction or distortion of competition may be occurring within a particular sector of the economy, or within a particular type of agreement occurring across various sectors, it may initiate a market inquiry.
The Authority says that, among other things, this inquiry is seeking to establish the number of shopping malls and anchor tenants across the country, the process by which shopping mall tenants are awarded space, how shopping mall rentals are set, the number of shops existing in the shopping malls competing with anchor tenants, as well as competition complaints or concerns that exist in the market. To a large extent, this problem has its roots in unregulated practice that ran rampant before the Authority was established. The Competition Bulletin says that during the development of most shopping malls in Botswana, competition law was not yet in place to encourage competition within these structures.
The inquiry is being conducted in Gaborone, Francistown, Selebi-Phikwe, Maun, Palapye, Jwaneng, Serowe, Kanye, Mochudi, Kasane, Ghanzi, Ramotswa, Molepolole, Lobatse and Mogoditshane. The Authority hopes that it will contribute to and help redress competition issues that may exist in the retail property market. It has begun analysing data that has been collected so far.

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