Supermarket stopped rivals setting up shop – watchdog

TESCO illegally stopped its rivals from opening nearby stores at a site in Wales, a watchdog has said.

An investigation by the Competition and Markets Authority (CMA) found that the supermarket giant unlawfully blocked rivals from opening stores at 23 locations across the UK, including at a Tesco Express store in Pencoed, Bridgend.

The CMA discovered that Tesco had been preventing landlords from letting property to other supermarkets during monitoring in 2018, a practice that is unlawful under the Groceries Market Investigation (Controlled Land) Order 2010.

A company can do this by either attaching restrictive covenants to land it sold on (clauses that prevented the new owner from letting to another supermarket or convenience stores) or by seeking agreements that gave exclusivity to a business or protection from competition.

Tesco admitted it blocked a “small number” of cases between 2010 and 2015 due to “administrative errors” but denied using “restrictive property agreements”.

This may have reduced competition and so lowered choice which leaves shoppers worse off, and is unlawful under the Groceries Market Investigation (Controlled Land) Order 2010.

Andrea Gomes da Silva, executive director, markets and mergers at the CMA, said: “It’s unacceptable that Tesco had these unlawful restrictions in place for up to a decade. By making it harder for other supermarkets to open stores next to its branches, shoppers could have lost out.

“In the future, we want the ability to fine businesses if we find that they are in breach of our orders. That’s why we’ve called on the Government for more powers.”

Tesco has now agreed to take remedial action for all affected land agreements, improve its internal processes and train staff to avoid future breaches and ensure that all new land agreements are in line with the order.

The CMA said it will monitor Tesco’s progress and may take formal enforcement action if further breaches are found.

It will also write to all other supermarkets bound by the Order (Waitrose, Sainsbury’s, Asda, Morrisons, M&S and the Co-op), asking them to show that their land agreements are not in breach.

If any supermarket is not compliant, the CMA will consider taking enforcement action.

A spokesman for Tesco said: “We do not use restrictive property agreements. However, in a small number of historic cases between 2010-15, administrative errors by former advisers meant that our internal processes were not followed correctly.

“As the CMA recognises, we have worked collaboratively in resolving this, and our voluntary review of 5,354 land deals found isolated issues in just 0.4% of these.

“We have since strengthened our controls and training, and are releasing the affected parties from all noncompliant terms.”