Massmart Blocked From Selling Some Foods in Cape Town

Massmart Holdings Ltd. (MSM), the South African food and goods wholesaler owned by Wal-Mart Stores Inc. (WMT), has been stopped from expanding its product line at a Cape Town mall after a court ruled in favor of Shoprite Holdings Ltd. (SHP)

The Western Cape High Court found that Shoprite, Africa’s largest grocer, had an exclusivity clause in its lease contract with the CapeGate mall in Cape Town, Massmart corporate affairs head Brian Leroni said in an e-mailed statement. That prevents any new entrant selling certain types of perishable food. Massmart intends to appeal the ruling, he said.

Shoprite filed a court order earlier this month in an attempt to prevent Massmart from selling fresh food or liquor at its Game stores in the CapeGate mall, invoking an exclusivity clause in its lease agreement. Massmart said Oct. 16 it had referred Shoprite’s claim to the Competition Commission.

South African retailers have been battling increased competition and shrinking consumer disposable incomes to maintain profitability. Massmart said Aug. 22 that it will focus on introducing new lines in its fresh-food, clothing and e-commerce units to drive growth.

Shoprite will “lose sales and suffer financial loss if Game is permitted to trade as a general supermarket and grocery store, as well as a liquor store, at the center,” Shoprite said in its application to the Western Cape High Court. Shoprite spokeswoman Sarita van Wyk didn’t immediately respond to a request for comment.

To contact the reporter on this story: Janice Kew in Johannesburg at jkew4@bloomberg.net

To contact the editor responsible for this story: Celeste Perri at cperri@bloomberg.net

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