Competition Commission proposes sweeping changes to how fruit and vegetables are sold

Supermarkets have been ordered by the Competition Commission to change the way they sell fruit and vegetables to make it easier for consumers to compare.

This is among the recommendations made in the final report following the commission’s Inquiry into the Fresh Produce Market.

The report was handed to Minister of Trade, Industry and Competition Parks Tau by chairperson of the Competition Commission Doris Tshepe on Monday. The report makes 31 recommendations on changes that are aimed at increasing competitiveness and allowing the entry of new players into the South African fresh produce market.

The scope of the inquiry focused on the price of five fruits: apples, citrus (particularly oranges and soft citrus), bananas, pears and table grapes. It also included six vegetables: potatoes, onions, carrots, cabbage, tomatoes and spinach.

Easier comparisons

One of the recommendations by the commission is that supermarkets must, within a year, start to sell fruit and vegetables in a way that makes it easy for the consumer to compare prices.

“The Inquiry noted that the majority of prices for fresh produce are not comparable between retailers from the perspective of a consumer. This is mainly because prices are presented on a per-unit basis, and these units are varied across the different supermarkets. For instance, one retailer may sell tomatoes in 3kg bags while another opts for a 1kg or 3.5kg bag. An accurate price comparison by a consumer on a like-for-like-basis is, as a result, more difficult,” the report reads.

“The Inquiry therefore makes a finding that the lack of transparency in unit pricing (per kilogram/gram) distorts competition, in that consumers are less able to compare pricing between retailers. This lack of transparency in the pricing of fresh produce on a weighed price (per kilogram/gram) impedes, restricts or distorts competition,” it continues.

“To remedy this, the Inquiry requires the following remedial action: Retailers, namely Shoprite Checkers, Pick n Pay, Woolworths, the SPAR Group, Food Lover’s Market and Massmart, must display pricing on a “per 100 gram” basis for the 11 prioritised fresh produce products, in addition to any other pricing display chosen by the retailer. These retailers should, to the best of their endeavours, extend this pricing to all other fresh produce sold at their stores, and the weighed price should be displayed in such a manner that a consumer can clearly and easily identify that price. Most of these displays should be implemented within 12 months,” the report continued.

“Concretely put, it is unreasonable and impractical to expect a consumer to convert the per kilogram price where one retailer opts to sell its potatoes in unit sizes of, for example, 1.5kg, 3.5kg or 7kg, whilst another opts to sell their potatoes in 5kg or 10kg unit sizes. As such, a true comparison of which retailer is cheaper – from a consumer’s perspective – is impractical and not consumer friendly,” the report concluded.

International buy-in

Price transparency in retail prices has been flagged internationally by, among others, the United Kingdom’s Competition and Markets Authority during its retail market inquiry in 2015, and the Australian Competition and Consumer Commission.

According to the report released by the Competition Commission this week, the members of the inquiry panel themselves struggled to accurately compare the prices of fresh produce. This was likely to affect the average consumer, who had even less access to pricing information.

The report also pointed out that after an initial recommendation that the unit price of fruit and vegetables be used across the board, retailers had largely rejected the provisional remedy.

It said retailers claimed, among other reasons, that this would add another layer of cost, that the current labelling space did not have enough space to accommodate the display of price per kilogram … and that it was impractical for some products (such as bunched products) to display a price on per-kilogram basis.

The report did add that subsequently, the conversation became more constructive.

“The binding factor in relation to this remedy is the consumer’s welfare, which both the Fresh Produce Market Inquiry and the retailers regard as vital,” the report concluded.

Read more: Wholesale fresh produce in ‘concerning state,’ finds the Competition Commission SA

Tau said it was an important milestone in building a more inclusive, transformed and competitive economy in South Africa.

“The fresh produce market holds immense significance for our nation. It is not merely a commercial sector. It is a lifeline for households and a driver of food security,” Tau said, adding that the 31 remedies proposed by the commission spelt out a “clear and actionable roadmap” to improve the situation.

He said the report should translate into tangible reforms that would benefit all South Africans, particularly those who had been excluded from economic participation.

The fresh produce market in South Africa is valued at R53-billion annually (excluding informal sales) and the report stated that it presents a “significant opportunity for growth and inclusion.”

Concerning retailer pricing of the identified fresh produce, the analyses of the inquiry found that supermarket sales and pricing revealed instances of high mark-ups of total revenue over what suppliers were paid for some of the selected products in the periods analysed.

“However, net margins – after the high costs of supermarket chain operations are accounted for – are slim. This indicates concerns in the value chain where high rents may be extracted at the supermarket level of the value chain. The implication is that under the current models of modern food retailing, supermarket chains are not efficiently transmitting prices obtained from farmers to consumers for these produce categories,” the report continued. “This suggests that competition in the formal retailing of fresh produce is not as healthy as it could be.”

Systemic barriers

The commission also raised concerns over inefficient municipal fresh produce markets and inefficiencies in the value chain driving up prices.

The report also highlights as stumbling blocks to improving competitiveness in the sector:

• The conduct of fresh produce market agents;


• High input costs (particularly for certain fertilisers and seeds);


• Regulatory obstacles; and


• Systemic barriers to entry for small-scale, emerging and historically disadvantaged farmers.

Tshepe said the goal of the inquiry was to achieve better outcomes for all participants and stakeholders. She said the commission’s 2024 report into food prices “indicated alarming levels of price increases and volatility in pricing for various food products, including fresh produce.”

“In some instances, these price increases passed the annual inflation rate which raises the question about the drivers of such increases. This has the greatest effect on [the] poor and low-income earners who have to spend a great portion of their income on purchasing essential products,” she said.

Read more: To feed a family of four just the basics costs R145.18 more than a year ago

The inquiry did find that there was a combination of features that distorted competition in the fresh produce market. It will put forth 31 recommendations and remedial actions.

Deputy Competition Commissioner Hardin Ratshisusu, who chaired the inquiry, said the report was more than a document.

“It provides rich insights into the fresh produce market and a path to economic inclusion. It reflects the need to address entrenched challenges to in the end create a market that works for all … and ultimately to the consumer. Market inquiries are an important strategic focus area of the commission,” he said.

The fresh produce market was one of the most important sectors of the economy, Ratshisusu said. The report comes after rigorous analysis and extensive engagements.

Competition concerns – African Rainbow Capital

Among the recommendations of the inquiry is that the cross-shareholding by Patrice Motsepe’s African Rainbow Capital in both the RSA Group and Subtropico impedes, restricts and distorts competition, Ratshisusu said.

The two roleplayers jointly control the majority of South African markets that sell staple fruit and vegetables such as potatoes, apples, bananas, onions and tomatoes.

“The inquiry finds that African Rainbow Capital’s cross-shareholding in the RSA Group and Subtropico impedes, restricts or distorts competition,” Ratshisusu said. Both companies are massive players in the market agent sphere when it comes to the fresh produce market.

According to the report, the commission will recommend that ARC either voluntarily divest in one of the two companies within six months or be forced to sell. DM