Massmart - Exceptions to amended complaint referral

In response to Massmart’s amended complaint referral, the respondents each filed a further exception application (we note that Shoprite combined its exception with a brief answer to the referral which it reserves the right to supplement). We attach copies of these documents for your records.

The overall basis for all three of the exceptions is again that the complaint referral lacks the averments necessary to show contravention of the Competition Act and is vague and embarrassing.

The following points, which were raised in the previous set of exceptions, are again identified by the respondents:

  • The complaint filed with the Commission differs from the complaint referral (now as revised);
  • Massmart has failed to plead the material facts on which it relies, including the particulars of the relevant agreements;
  • Massmart has failed to make the necessary allegations to sustain a section 5(1) complaint;
  • The relevant market/s have not been defined clearly, coherently or consistently;
  • Massmart has failed to join the necessary parties (being the landlords to the agreements complained of);
  • The relief sought is incompetent / not properly supported / overbroad.
  • Further, the following additional points have been raised, which mainly relate to guidance given by the Tribunal (in its decision on the previous exceptions) which the respondents allege was not adhered to by Massmart in the amended referral:
  • Clarification on whether Massmart’s case is based on the individual effect of a single exclusivity clause, or identified clauses in identified agreements, alternatively whether it is based on the cumulative effect of the numerous different exclusive lease agreements.

The respondents argue, as raised as a potential issue by the Tribunal, that a case made out on cumulative effects does not fall within the scope of a section 5(1) offence, and therefore that Massmart has failed to disclose a cause of action.

  • Related to this, there is also a greater focus on effects. In particular, that Massmart has not alleged the anti-competitive effects of each respondent’s individual conduct upon competition – and has only alleged a negative effect upon Massmart and its plans.
  • More emphasis is also placed on the detrimental effects of the exclusive lease agreements being ‘enforced against Massmart’ rather than any effect of the mere existence of the exclusivity clauses. Pick n Pay submits that to be successful, Massmart needs to plead that the exclusive agreements operate to exclude it from the relevant market, and that they are ‘enforced’ or ‘invoked’ against Massmart.
  • All three of the respondents have raised non-joinder again, now specifically with added emphasis on the guidance provided by the Tribunal.
  • Shoprite submits that the question of joinder still needs to be determined by the Tribunal, and suggests that it is not only important for purposes of these proceedings but also possibly for future damages claims and future determination of a possible penalty (there is no penalty for a first offence under section 5(1)).

It then also specifically makes mention of SAPOA, adding that by citing SAPOA Massmart has acknowledged that the landlords do have an interest in the matter. However, that Massmart has no basis to cite SAPOA only and exclude the landlords who are parties to the relevant lease agreements. Shoprite then later goes on to deny that “SAPOA is the duly authorised representative of each of the landlords implicated by the allegations of Massmart”.

The last point, non-joinder, is of course most relevant to SAPOA.

Next steps

As a next step, Massmart will have an opportunity to answer the exception applications. We will keep membersupdated on any further developments.

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