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Patel hopes inquiry into retail will open doors

| Economic factors

Economic Development Minister Ebrahim Patel is looking to the Competition Commission’s inquiry into the grocery retail sector to provide greater access for small retail businesses.

He said that the inquiry launched last year was "very significant" and could address issues of food prices and market access, areas dominated by large supermarket chains. The commission expects to complete its work by May next year.

The inquiry was the second initiated by the commission in terms of amendments to the Competition Act which allow it to proactively conduct investigations. The first one conducted was into the private healthcare industry.

"Over the past decade or more, a number of developments in the retail sector affected township shops and small retail businesses of South Africans, often very negatively," the minister said in a written reply to a parliamentary question by African National Congress MP Imamile Pikinini.

"For example, national supermarket chains moved aggressively into townships and rural areas, often in newly constructed shopping malls, impacting on the viability of small, informal and independent retailers in a number of ways. A study by the Bureau of Market Research in Soshanguve found that half of informal businesses located near to a new shopping centre closed down and most retailers had a decline in their turnover, profitability, stock movement and product range," the minister said.

He said the reason for the grocery retail market inquiry was to consider ways to improve dynamic competition and access for small businesses in the retail sector, and to combat restrictive practices.

The inquiry will look at the effect of the expansion, diversification and consolidation of national supermarket chains on small and independent retailers in townships, rural areas and the informal economy; the effect of long-term exclusive lease agreements between shopping mall owners and national supermarket chains that often keep smaller retailers out; and the dynamics of competition between local small retailers and foreign-owned small retailers in townships.

Attorney Halton Cheadle has been appointed chairman of the inquiry with Lulama Mtanga and Lumkile Mondi as panelists.

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