Commission tackles supermarket land and supplier issues

Supermarkets that buy up land with the apparent intention of freezing out rivals could be forced to sell it, says the Competition Commission.

The idea is laid out in the commission’s just-published preliminary report into competition between UK supermarkets. It says that retailers could be prevented from using restrictive covenants when they sell land that make it harder for competitors to open new stores.

It may also decide that if supermarkets do not develop their land within a certain amount of time they could be forced to sell it if there are not enough different retailers in the area.

The commission also looked into the issue of retailers’ practice of loading suppliers with additional and unexpected costs, and said it was concerned about it. It said suppliers should be given extra protection and will consult with both retailers and suppliers about the best way to deal with the problem.

However, the report denies that Tesco is too powerful, concluding: “Tesco is not in such a strong position that other retailers cannot compete.”

In response to the report, Tesco said that the commission had “laid to rest the claims that Tesco’s position in the market means that other retailers cannot compete or is acting as a barrier to expansion by other grocery retailers.

“As expected, this provisional report looks at detailed points on suppliers, land and the planning system which we will discuss with the Competition Commission in the coming months. As in other inquiries, they have set out a wide range of possible remedies. Our job is to make sure that any remedies are justified, have no perverse effects and that the consumer is the winner.”

Supermarkets are now able to respond to the report’s findings, and the commission’s final recommendations will be published next March.

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