The Competition and Markets Authority is said to be reviewing rules that stop major supermarkets from blocking competitors from opening stores nearby.
The rules apply to seven major supermarkets – Tesco, Sainsbury’s, Asda, Morrisons, Waitrose, M&S and Co-op – each of which has been found to be breaking them in action taken by the CMA since 2020, and forced to rewrite property deals as a result.
However, the rules do not apply to Aldi or Lidl, because their presence in the UK was deemed too small at the time they were drawn up in 2010.
The CMA has now told supermarket bosses it is reviewing the situation in light of their frustration over the differing treatment, The Telegraph has reported.
Officials are said to have been asked to consider whether Aldi and Lidl should be added or whether to remove the restrictions altogether from all supermarkets.
The former would prevent Aldi and Lidl from signing any property deals with clauses blocking competitors from opening nearby, while the latter would enable traditional supermarkets to insert such clauses in their property deals to stop rivals including the discounters from opening near them.
Supermarkets are said to be hopeful the restriction will be removed, given Business Secretary Jonathan Reynold’s 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.
Iceland executive chair Richard Walker last year bemoaned Aldi and Lidl’s exemption from the rules, saying they were “preventing competition on retail parks” with “legal tricks” in the form of restrictive covenants in property deals.
However, Iceland is also not covered by the rules, which were set out in the Groceries Market Investigation (Controlled Land) Order 2010.
At the time of Walker’s comments, neither Aldi nor Lidl denied having restrictive covenants in place, though property industry sources said it was unusual for either discounter to use them, with many of their stores being standalone developments and freehold-owned rather than leased.
In 2020, the CMA found Tesco had 23 breaches of the rules in its land deals, and as a result wrote to the other supermarkets covered asking them to review their property agreements for similar breaches. Over the five years since, the action has brought to light 55 breaches by Morrisons, 18 by Sainsbury’s, 14 by Asda, 10 by M&S, seven by Waitrose and, most recently, 107 by Co-op. In each case the retailer agreed to rectify any outstanding breaches.
“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,” said a CMA spokesman.
“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.”
Neither Aldi nor Lidl provided a comment.
Aldi has more than 1,050 UK stores and has set 1,500 as its long-term target. Lidl has more than 960 and has also said it aims to open hundreds more.
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