The Democratic Alliance is considering amendments to the Competition Act following the liquidation of two South African suppliers who had long-standing relationships with Woolworths, with a third similar case also coming to light.

The party’s spokesperson on trade, industry and competition, Toby Chance, announced today that the DA is examining legislative options to address what it calls anti-competitive exclusivity agreements imposed by large retailers on smaller suppliers.

The move comes as controversy continues over the collapse of Beyers Chocolates, which went into liquidation in April after a 34-year supply relationship with Woolworths ended in dispute. More than 700 jobs were lost when the chocolate manufacturer closed its doors.

This week, news also emerged that Grey’s Marine, a seafood supplier to Woolworths for more than 30 years, has accused the retailer of systematically dismantling its family business, resulting in 230 job losses and the company’s closure.

The Beyers dispute

The dispute between Beyers Chocolates and Woolworths centred on an exclusivity agreement that Woolworths says was signed in 2019, covering certain chocolate products and formulations developed specifically for the retailer.

According to Woolworths, the company discovered in 2023 that Beyers was supplying “products materially similar” to Woolworths’ exclusive offerings to competitors including Checkers and Pick n Pay. The retailer said this was not disclosed and constituted a breach of the exclusivity agreement.

Woolworths said multiple engagements followed in an attempt to resolve the matter, but the parties were “ultimately unable to align on the conditions required to continue the relationship”. By January 2025, Woolworths had ceased manufacturing its chocolate products with Beyers.

Beyers’ founder, Kees Beyers, however disputes the retailer’s version of events. He argued that the exclusivity agreement had expired in 2019 and that products supplied to other retailers came from a second factory the company had acquired, which was already supplying those customers.

Beyers maintained that exclusivity agreements should be confined to specific product categories and should not prevent companies with separate production facilities from supplying non-competitive products to other customers.

The chocolate manufacturer had borrowed R200 million to fund a new factory to expand its capacity. When Woolworths withdrew its business, Beyers could not service the debt, leading to liquidation.

Beyers accused Woolworths of abusing its dominant position as a customer, saying the retailer had reduced orders substantially during the dispute, creating unsustainable financial pressure that forced the closure.

In its official statement, Woolworths said the decision to end the relationship was necessary to “protect its proprietary product development, brand differentiation, and long-term commercial interests”.

Grey’s Marine allegations

Grey’s Marine founders Joy and Trevor Grey have now come forward with similar allegations, describing what they call years of pressure, intimidation and commercial dependency.

According to the Grey family, Woolworths withdrew the company’s Johannesburg seafood counter business – allegedly worth around R80 million annually – and transferred it to a competitor.

The family also alleged that Woolworths demanded major capital expenditure, including a R5 million skinwrap machine purchased after assurances that sufficient business would follow.

Grey’s Marine claimed the family was pressured into accepting only R5 million for the business and machinery before being forced to close.

In a statement to The Citizen, Woolworths did not deny the allegations but said Grey’s Marine had reached out with concerns and that a constructive meeting had been held with the group chief executive.

“Our leadership team is committed to working with Grey’s Marine. At this stage, we will be keeping this matter internal, it is too soon to share feedback,” the retailer said.

DA’s legislative proposal

Chance said the DA has also learned of a third small business that was forced into liquidation in 2024 under similar circumstances involving Woolworths.

“There is no good economic reason that any retailer should tell a supplier they can’t sell goods elsewhere, and there is no reason any supplier should force a retailer to carry only their brand of a certain class of product,” Chance said.

He said the issue lies in how dominance is defined under South African competition law. Under section 7 of the Competition Act, a firm must control 45% or more of a defined market to be automatically deemed to possess significant market power.

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The Competition Commission dismissed a complaint in the Beyers case because Woolworths controls only 9% of the groceries market and therefore could not be regarded as dominant.

“In the DA’s view, the ‘dominance threshold’ of 45% shouldn’t be required to show that an exclusivity agreement is abusive,” Chance said.

He argued that in the Beyers and Grey’s cases, dominance was established through contractual dependence – the suppliers relied on Woolworths for the majority of their business, built up over many years.

“After big retailers make small businesses contract for exclusivity, and later seek to renegotiate terms once operational dependence has been established, they are taking advantage of their position and competition law must step in,” Chance said.

The DA said it stands for the freedom of businesses to contract on mutually agreed legal terms, but that the law must address situations where large retailers exploit their position once smaller suppliers have become operationally dependent on them.