Game Shutdown by Shoprite

Retailer Game on Tuesday told consumers through posters set up at some perishable goods stands in its Cape Gate shopping centre store that it had been "shut down by Shoprite", but "hope(d) to be back as soon as possible to help save you money".

Shoprite Checkers obtained an interim interdict against Mass Stores and Hyprop Investments in the Western Cape High Court on Tuesday.

The interdict prohibits and restrains Mass Stores which is owned by the US retail giant Walmart and operates a Massmart Game store in the Cape Gate shopping centre, from using any part of shopping centres in Brackenfell, Cape Town for selling certain food items and liquor.

In terms of this interim ruling, Mass Stores is prohibited and restrained from operating as a supermarket or grocery store by selling products like bread, chilled chicken, processed meat, cheese, cream, yoghurt, eggs, fresh milk and meat.

Mass Stores is also temporarily prohibited and restrained from using any part of the Cape Gate Centre as a butchery, bakery, fish shop, fruit and vegetable shop, dispensary or delicatessen.

This interim inderdict is in place pending the outcome of Shoprite Checkers’ application for a final interdict on the matter.

Mass Stores has asked the Competition Commission to investigate the matter. This means that any declaration by the competition authorities on the validity of an exclusivity clause of Shoprite Checkers’ lease will also have to be taken into account.

The exclusivity clause is still valid for about 15 years.

This type of clause usually helps to ensure that anchor tenants in new shopping centre developments will have limited competition.

Gape Gate landlord Hyprop Investments told Fin24 on Wednesday that it is contractually obliged to abide by the terms of the Shoprite lease agreement, which includes an exclusivity clause.

As a point of clarity Nikki Catrakilis-Wagner, Hyprop's investor relations executive, said although Shoprite initially launched an application against Game and Hyprop Investments, the action against Hyprop Investments was not pursued.

"To this end, the interim interdict is against Mass Stores only and not Hyprop Investments," she said.

Meanwhile, Massmart said on Tuesday that consumers are the real losers in its legal tussle with Shoprite Checkers.

"We respectfully disagree with the finding and intend to fight the matter on appeal," said Massmart Group corporate affairs executive Brian Leroni.

"The losers in this action are all South African consumers who, through the device of exclusivity clauses, are denied the benefit of a free and fair competitive trading environment."

In response to a query from Fin24, Shoprite CEO Whitey Basson said he is pleased that the legal principles had been applied correctly.

Basson said Cape Gate consumers are certainly not being limited in their options as both Pick n Pay and Woolworths have been trading in the centre offering the same range of products, and customers are free to choose where they want to buy.

Basson said Shoprite Group customers can rest assured that Shoprite Checkers is the cheapest supermarket chain in South Africa.

He said the group does not rely on competition from rivals to offer customers the lowest possible prices.

The supermarket chain's pricing in stores where it has an exclusivity clause is no different to that of stores in centres where there is no such clause in its lease agreement, Basson said.