Tesco, Sainsbury’s, Asda, Morrisons, M&S, Waitrose and Co-op have all been named and shamed by the Competition & Markets Authority for having unlawful and ‘uncompetitive’ land deals over the past five years.

The supermarkets have had to express their regret at the situation, and rewrite the offending deals to bring them in line with the law.

So naturally they would take issue with the fact Aldi and Lidl, the UK’s fourth and sixth-biggest supermarkets respectively, are not covered by the same law and so do not have to comply with it.

The situation stems from the Groceries Market Investigation (Controlled Land) Order 2010, which bans so-called restrictive covenants in leases, used by supermarkets to block rivals from opening stores nearby. Because Aldi and Lidl’s presence in the UK at the time was small, they were not designated as one of the seven ‘large grocery retailers’ covered.

Now the law could be extended in a review, the competition regulator has indicated.

A level playing field

“We are aware of concerns that the order should cover more supermarkets, due to changes in the groceries sector, and we always keep this under review to ensure a level playing field,” a CMA spokesperson says.

CMA sources say the regulator has the power to designate additional retailers to bring them within scope of the order, where they meet certain criteria.

It is an apparent change of tune since 2020. At that time, CMA sources argued that because Aldi and Lidl were not part of the groceries market investigation that led to the order, they could not be added without a further investigation.

Either way, there is another possible outcome of the review that is likely more worrying to the discounters. According to The Telegraph, officials have also been asked to consider removing the restriction from all retailers.

Supermarkets are said to be hopeful of the outcome, given business secretary Jonathan Reynolds’ call in February for the CMA to adopt “a faster, more agile approach to protecting competition”, under its interim chair Doug Gurr, the former head of Amazon UK, who was put in charge of the regulator in January.

The traditional supermarkets no doubt will be hopeful of this outcome. With Aldi and Lidl’s growth once again accelerating as more shoppers migrate to them amid renewed economic uncertainty, the bigger concern for both discounters is likely whether they are opening stores fast enough, not traditional rivals opening near them. 

In any case, major rivals already add years to Aldi and Lidl’s new store plans by submitting planning objections with such regularity that the two discounters take them as a given.

Supermarket competition

Whether the CMA would have much appetite for removing the restriction from all supermarkets seems doubtful. Only last month, as it exposed 107 breaches by the Co-op, the authority said: “Restrictive agreements by our leading retailers affect competition between supermarkets and impact shoppers trying to get the best deals.”

The CMA’s latest statement also reiterates the importance of the order. “The Groceries Market Investigation (Controlled Land) Order plays an important role in maintaining competition between supermarkets, which is crucial to the finances of families across the country,” a spokesperson says.

Adding Lidl and Aldi to the rules as they exist would be fair – removing them entirely from all supermarkets would not be in the interest of consumers. And given Aldi and Lidl are the fastest-growing supermarkets, neither would it help the government’s ambition of enabling faster growth.

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