The COMESA Competition Commission CEO and Director Mr. George K. Lipimile has sanctioned investigations into allegations of anti–competitive business practices by Africa’s largest Supermarket store; Shoprite and barcode supplier GS1 Kenya, a licensee of GS 1 a company based in Belgium.
Who is Mr. George K. Lipimile?
Mr. George Lipimile is the first Director of the COMESA Competition Commission since its commencement of operations on 14th January, 2013. He brings with him 32 years of experience in competition law and policy enforcement at national, regional and multilateral level.
Prior to his current appointment, he served as Senior Advisor at the United Nations Conference on Trade and Development (UNCTAD) in the Division of Competition and Consumer Law Policy and established and became the first Executive Director of the Zambia Competition Commission (ZCC) in Zambia (the first modern competition Authority in the Eastern and Southern African Region). Mr. Lipimile also worked as head of Zambia Intellectual Property office and served as Chairperson of the African Regional Intellectual Property Organisation for two terms.
While at UNTAD, he was in charge of the technical assistance and capacity building programmes in the area of competition and consumer policies for the developing and Least Developed Countries. His duties at ZCC included advising the government on a range of trade and competition issues, including the negotiations of the Doha Rounds, WTO Agreements, EPAs negotiations, in addition to issues relating to the regional trade and economic integration of the SADC/COMESA Agreements.
This investigation follows the refusal by Shoprite Uganda, to shelve several consumer goods produced by Ugandan manufacturers. Its alleged, several Ugandan manufacturers and producers, that sourced their retail product barcodes from other sources, other than GS 1 Kenya were turned down by the Supermarket.
Over eight major manufacturers in Uganda have been affected this business practice of Shoprite in Uganda. It is further rumored that this practice is being implemented not only in Uganda, but in every country where Shoprite has established its business.
The affected Ugandan manufacturers and producers of consumer goods, were referred by Shoprite central purchasing store in Uganda, to purchase retail product barcodes from only GS1 Kenya, as a condition for their products accessing the shelves in Shoprite.
This action by Shoprite resulted in a complaint being filed, with the COMESA Competition Commission in Malawi and with the Ugandan Ministry of Trade, Industry and Cooperatives, by Barcodes Uganda, a direct competitor of GS1 Kenya, for Uganda’s retail product barcode market, on-behalf of the affected manufacturing companies in Uganda.
The COMESA Competition Commission in its public information notice said, “The Commission received a complaint alleging that Shoprite and GS1Kenya have entered into agreement in terms of which suppliers who wish to merchandise their products in Shoprite supermarkets in Uganda must obtain their barcodes from GS1 Kenya. It is alleged that since February 2019, Shoprite has refused to receive products which do not have GS1barcodes and has further directed its suppliers to obtain barcodes from GS1 Kenya.”
Gist of Investigation
The investigation shall aim at establishing three facts; whether there exists, any agreement, written, oral or inferred from conduct, between GS 1 Kenya and Shoprite, and if so, whether the conduct between the two companies, is likely to or did prevent, restrict or distort competition within the Common Market, within the Meaning of Article 16 of the Regulations. The third aim of investigation however connotes that, GS1 Kenya may have already denied involvement in the entire matter, since the information notice seeks to establish whether Shoprite acted unilaterally in the market, in violation of Article 18 of the Regulations.
If indeed, these two companies, as a result of investigations, are found to have engaged in anti-competitive business practices, then both could be fined up to 10% of their annual turnover units of account in the common market in the preceding business year. This fine being imposed regardless of whether their conduct was intentionally or negligently done. In arriving at this decision, the Commission looks at the gravity and duration of infringement.
Retail Barcodes Sector – what are barcode?
Retail barcodes are a machine-readable code in the form of numbers and a pattern of parallel lines of varying widths, printed on a commodity and used especially for stock control. Easily ignored, but barcodes are part of modern packaging of products, and continue to facilitate trade internationally.
Manufacturers and producers of any good or product that must be sold to the final consumer, outside their own distribution store usually incorporate barcodes in their packaging.
To the manufacturer, they are a tool of inventory management and for retailers or supermarkets; they are invaluable when it comes to inventory management, product traceability and quick business service, especially where many customers need be served in the shortest possible time.
The barcodes sector and market, has globally for long been controlled by the monopoly of Global Standard One, commonly called GS1, for nearly 2 decades now, however the emergency of directly competing companies like International Barcodes Network in New Zealand seem to have tilted the market dominance of GS1, a Brussels based company.
Both International Barcodes Network and GS1 have made inroads in nearly all countries in the world, establishing branches and offices where manufacturers and producers of consumer products can acquire barcodes, to ease the doing of business both nationally and internationally.
IBN / GS1 where is the difference
The main difference between these two global companies, seems to lie in the pricing structure for their barcodes. While International Barcodes Network and all its licensees in over 120 countries in the world do barcode sales on a one-off purchase, life time ownership basis, Global Standards One or GS1 runs a model of barcode renting through the payment of annual membership fees for each barcode assigned to a manufacturer, this annual subscription then gives the manufacturer the right to use the barcodes assigned.
The barcodes are able to capture the entire business profile of every producer or manufacturer in relation to each separate consumer product, and with the help of international barcode databases, consumers all over the world can trace the manufacturers of products they buy, and country of manufacture.
About Shoprite Group
Shoprite considers themselves, as indicated by the information notice by the Commission as; “the largest supermarket retailer on the African continent…with thousands of stores and a network of distribution centres across 15 countries.”
In the Common Market, the Shoprite Group based in South Africa has several outlets totaling to 113 stores that is in Eswantini, Kenya, Madagascar, Uganda, Zambia Malawi and DR Congo. While in the whole of Africa, it can be found in Angola, Botswana, Democratic Republic of Congo, Ghana, Kenya, Lesotho, Madagascar, Malawi, Mozambique, Namibia, Nigeria, South Africa, Eswantini, Uganda, Zambia with a total of 613 stores.
In 2008 the Shoprite Group was added to the JSE Top-40 Index of blue-chips. In 2019 Shoprite won the Proudly South African Brand Award and was voted the best in the Grocery Store category as part of the Tiso-Blackstar/Sunday Times Top Brand Survey. Deloitte’s Global Powers of Retailing 2019 (covering the 2017 financial year) ranked The Shoprite Group as the 86th largest retailer in the world.