Competition in the Leasing of Retail Space in Zimbabwe

Introduction

Competition refers to a market situation where businesses independently strive for the patronage of customers, aiming to achieve profits, or grow market share. Where businesses are subject to competitive pressure from other businesses, it encourages them to improve their offerings and prices. Competition law and policy aims to prevent and regulate anti-competitive practices (such as agreements between companies to fix prices, exclusive dealing and abuse of a dominant market position) that could harm consumers or restrict competition.

Refusal to deal refers to a situation where a dominant firm in the market refuses to supply its products or services to a particular customer or competitor, without any valid economic justification. While in general each business may decide whom it wants to transact with, there are however circumstances where there may be limits on this freedom for a firm with market power. Refusal to deal is considered an anti-competitive practice if it prevents or reduces competition in the market; and where it is engaged in for the purpose of inflicting some economic loss on the target or forcing them out of a given market.

Refusal to Deal in the Leasing of Commercial Property

The development and leasing of commercial properties in Zimbabwe is undergoing significant transformation, characterised by a shift towards large-scale, mixed-use and lifestyle retail spaces. In this context, refusal to deal may involve declining to rent out retail space, office premises, or industrial property to certain businesses without a valid economic or legal reason. In some cases, landlords may agree to lease the property but impose restrictions on what tenants are allowed to sell, thereby limiting the range of goods or services offered. Resultantly, although a business is able to operate, it may be prevented from selling certain products while its competitors are not subjected to the same restrictions. This can limit competition and reduce consumer choice. While property owners generally have the right to choose their tenants, this right is not absolute, particularly where it is exercised in a manner that distorts competition.

Prohibition of Refusal to Deal
In the context of property leasing, refusal to lease commercial premises can have significant effects on market access, competition, and general participation in economic activities. The Competition Act [Chapter 14:28] (the Act) provides for refusal to deal under the First Schedule as an unfair business practice, which is a form of restrictive practice. Section 42(3) of the Competition Act provides that “any person who enters into, engages in or otherwise gives effect to an unfair business practice shall be guilty of an offence and liable: - (a) in the case of an individual, to a fine not exceeding level twelve or to imprisonment for a period not exceeding two years or to both such fine and such imprisonment; or (b) in any other case, to a fine not exceeding level fourteen.”
After establishing a case of refusal to deal, the Commission refers the matter to the National Prosecuting Authority for prosecution and the appropriate level of fine is determined by the presiding officer.

Forms of Refusal to Deal in the Leasing of Properties
These take the form of the following:
Outright Refusal to Lease – involves an outright refusal occurs when a landlord declines to lease premises to a potential tenant, such as a competitor of an existing lessee or new market entrant, without any objective justification. Where a landlord refuses to lease space to a new supermarket chain solely to shield an existing tenant from competition, the conduct may be exclusionary.
Conditional Leasing - involves imposing terms that restrict how tenants conduct business. Common examples include exclusivity clauses (e.g., only one supermarket allowed in a mall), non-compete clauses preventing tenants from stocking rival brands, or requirements to source goods from specific suppliers.
Selective Leasing – arises where landlords favour certain tenants over others without clear, objective, and transparent criteria. While tenant selection is a legitimate commercial decision, competition concerns arise when decisions are based on protecting incumbents rather than efficiency.

Effects of Anti-Competitive Conduct in the Leasing of Properties
Market Foreclosure - Refusal to lease retail space in shopping malls can prevent competing businesses from accessing strategically located premises that are essential for competitive market participation. Where a landlord controls prime or scarce retail space, denying access to certain tenants, particularly new entrants, can significantly reduce competition within the relevant retail market.

Harm to Consumer Welfare - Limiting the number and diversity of tenants in a shopping mall reduces competitive pressure among retailers. This may result in higher prices, fewer product choices, and lower quality goods or services for consumers, as dominant or incumbent tenants face little to no rivalry within the mall environment.
Establishment or Preservation of Market Dominance - Refusal to lease premises can enable existing tenants to strengthen or maintain their dominant position in the market. By limiting access to retail space for competitors, particularly in prime locations, landlords may indirectly support the continued dominance of certain businesses and reduce their competitive pressure.
Barriers to Entry - The perception or reality that access to prime retail space is restricted can discourage prospective businesses from entering the market altogether. This is particularly significant in Zimbabwe, where modern retail infrastructure may be concentrated in a few key locations. Such barriers to entry can stifle entrepreneurship, limit investment, and slow overall economic growth.

What Can be Done to Promote Competition?
To address these concerns, affected tenants and businesses are encouraged to take proactive steps. Suspected cases of refusal to deal can be reported to the Competition and Tariff Commission mandated to investigate anti-competitive practices. Businesses are also encouraged to document any anti-competitive communication or conditions imposed during the negotiation process, as this information may be useful in establishing whether the refusal was justified. On the other hand, landlords and property owners have a responsibility to ensure that their leasing practices are fair, transparent, and compliant with competition law and policy. Applying objective and non-discriminatory criteria when selecting tenants can promote a competitive environment.

Conclusion
Refusal to deal, particularly in the leasing of retail property, presents a delicate balance between contractual freedom and the need to preserve competitive markets. Landlords are generally free to choose their tenants; however, this discretion is curtailed where it is exercised in a manner that distorts competition or entrenches market power. While refusal to lease is not automatically unlawful in Zimbabwe, it becomes problematic when it is used as a tool to exclude competitors, entrench dominance, or undermine consumer