Pick n Pay Stores Limited

Legal report

Compliance

The compliance framework rests on the Group’s comprehensive set of policies, which are regularly updated to reflect governance best practice and the evolving legal environment. All employees and companies in the Group are obliged to comply with these policies.

Compliance questionnaires are distributed bi-annually to relevant departments to monitor compliance with statutes and regulations that have a bearing on the retail industry, such as the Companies Act, the Competition Act and the Consumer Protection Act. Statutory developments are regularly monitored to establish the compliance regime. Current areas being assessed include the Protection of Personal Information Act.

Compliance questionnaires form the dual function of monitoring compliance and educating employees in the requirements of statutory and regulatory compliance in the retail sector. Employees are trained in sessions dealing with important legal issues arising from the provisions of statutes, for example the provisions of the Consumer Protection Act.

The compliance questionnaires are audited internally to ensure accurate reporting.

No judgments, damages, penalties or fines for non-compliance with any legislation were recorded and/or levied against any company in the Group, or against any director, officer or employee during the period under review.

Each year, the executive directors and relevant members of senior management are required to declare in writing that to the best of their knowledge, they and the companies they serve, have complied with all relevant statutes and regulations. The most recent of these exercises was completed in March 2014, and no incidents of contravention of the policies or the statutes were reported.

Competition Commission

In June 2009, the Competition Commission initiated an investigation into various practices of supermarket retailers, examining competition concerns relating to grocery retail, including buyer power, category management, information exchange and long-term lease agreements. Pick n Pay co-operated fully with the Competition Commission in providing all information requested. After investigation, the Competition Commission informed retailers that they wished to further examine long-term exclusive lease agreements. All other concerns were dismissed.

The Competition Commission conducted an investigation into whether or not long-term exclusive lease agreements, as entered into between landlords and Pick n Pay and other national retail chains, were anti-competitive.

In January 2014, the Competition Commission informed the Company that they had concluded that the investigation did not warrant referral to the Competition Tribunal for determination.

All matters under investigation in regard to supermarket retailers have been concluded with a notice of non-referral of complaint, confirming Pick n Pay’s belief that no anti-competitive behaviour existed.

Litigation matters

The Company and its subsidiaries are not involved, and have not in the 2014 annual financial period been involved, in any legal or arbitration proceedings which may have or have had a material effect on the financial position of the Pick n Pay Group of Companies, nor is the Company aware of any such proceedings that are pending or threatened.