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By Florence de Vries

The Competition Commission’s probe into the practices of five listed supermarket groups will alter their corporate behaviour because they have been flagrantly doing what they want, with no regard for the consequences.

This is the view of Iraj Abedian, the chief economist at Pan-African Investment and Research, who said the retailers appeared convinced that the commission did not have the teeth to take them to task.

“Collusive behaviour is a way of life for these retailers and this culture has to be arrested,” Abedian said.

The commission has instituted a probe into Pick n Pay, Shoprite, Woolworths, Spar and Massmart, saying on Monday that it would investigate their purchasing methods, rental agreements and possible collaboration.

The retailers welcomed the investigation. Virtually all of them said they had nothing to hide and pledged to co-operate with the commission.

Cosatu spokesman Patrick Craven said the union federation had been calling on the commission to probe the entire food value chain for some time.

“Proven collusion in other parts of the industry suggest the problem of price-fixing is wider than the cases that have been proved, and this must include the retailers,” he said.

Craven said the fact that food inflation had dropped elsewhere but remained stubbornly high in South Africa was one factor fuelling the probe.

Solidarity said the rebate system between certain suppliers and retailers should be investigated as soon as possible.

Spokesman Jaco Kleynhans said the union’s monthly food price survey, done at three large supermarkets, showed that lower input costs were not passed on to consumers.

Two retail analysts, however, said competition between the groups was too fierce for there to be any collusion.

Ewan Walker at RMB Asset Management said retailers had been aggressive in deploying stores close to each other and together they spent more than R1 billion a year on advertising.

“It is impossible for them to collude on so many different price points.” Walker maintained that retailers had in most cases dropped margins to accommodate the consumer.

Chris Gilmour at Absa Asset Management said the commission had not suggested that collusion took place, but had focused on “peripheral issues” like exclusive leases and confidential rebates. It was likely to probe food manufacturers next, he said, as 60 percent of the retailers’ supply base came from five large manufacturers.

Analysts and unions welcomed the investigation. Roger Tejwani, a retail analyst at Credit Suisse Securities, said the probe should increase investor confidence in the sector, although the retailers being probed might experience short-term share price pressure.

The commission’s next move would be to meet with the retailers, said Nandi Mokoena, the body’s strategy manager.