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By Zweli Mokgata | Jun 30, 2009 | COMMENTS [ 0 ]

ECONOMISTS and analysts have welcomed the Competition Commission's decision to initiate an investigation against supermarket chains for possible contraventions of the Competition Act.

They say food inflation continues to rise - while interest rates, input costs and commodity prices have dropped.

The commission said yesterday it had launched an investigation against major supermarket chains Pick n Pay, Shoprite-Checkers, Woolworths and Spar, which make up more than 60percent of the market, as well as major wholesaler-retailers Massmart and Metcash.

The four major retailers yesterday distanced themselves from any wrongdoing - and promised to cooperate with the commission.

The commission has long identified supermarkets - and all industries that affect the poorest of the poor - to be investigated for anti-competitive practices, especially considering the continual trend of ever-increasing food prices.

Despite interest rates being slashed by 400 basis points this year and fuel prices down to R7,40 a litre from last year's highs of R10, food prices continue to rise.

Competition Commissioner Shan Ramburuth said in a statement: "The commission has made several interventions along the food value chain, from production through to processing. This complaint initiation now aims to uncover whether there are any possible competition concerns arising in the retail space, where consumers would most directly be affected."

Nandi Mokoena, the commission's manager of strategy, said the commission was still not decided on whether it would prosecute the supermarkets.

"We'll be speaking to the consumers, industry and competitors," she said. "

Whitey Basson, chief executive of the Shoprite Group, said: "I have already stated four weeks ago that Shoprite would welcome an investigation in this regard by the Minister of Agriculture.

Spar sent a challenge to the commission, proclaiming that it had nothing to hide.

Group marketing director Roelf Venter, said: "Retail is the most competitive sector in SA so let the commission get this once and for all. Spar does not sit around tables with other retailers in discussions."


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