Tesco stopped rivals opening nearby stores, watchdog finds
The competition watchdog has censured Tesco for breaking the law by blocking rivals from opening shops near its stores.
On Friday, the Competition and Markets Authority (CMA) said Tesco had prevented competitors opening supermarkets in 23 locations around the country, including five in London.
The supermarket did this by either attaching legal conditions known as “restrictive covenants” to land sales – preventing the new owner from letting the site to a supermarket rival – or seeking long exclusivity agreements in convenience store leases to keep competitors out of the development. The anti-competitive behaviour had potentially been to the detriment of shoppers, the CMA said.
Andrea Gomes da Silva, the CMA’s executive director of mergers and markets, 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.”
The watchdog discovered in 2018 that Tesco was preventing landlords from letting property to other supermarkets. The situation potentially reduced local competition, leaving shoppers worse off, it said.
In a letter to the Tesco chief executive, Dave Lewis, Gomes da Silva said she was concerned it had “repeatedly breached” the CMA’s 2010 order which was put in place to stop supermarket chains from benefitting from long exclusivity arrangements and restrictive covenants.
Gomes da Silva acknowledged that the company had sought to rectify the situation but said the episode highlighted “significant shortcomings in compliance for a company of Tesco’s scale and resources”.
Tesco, which is the UK’s biggest supermarket chain, insisted it did not use restrictive property agreements and blamed “administrative errors”.
“We do not use restrictive property agreements,” Tesco said in a statement. “However, in a small number of historic cases between 2010 and 2015, administrative errors by former advisors meant that our internal processes were not followed correctly.”
Tesco said it had worked with the CMA to resolve the matter and the 23 breaches were small in the context of more than 5,300 land deals over the past decade. “We have since strengthened our controls and training, and are releasing the affected parties from all non-compliant terms,” it said
The CMA said it was also writing to all rival chains including Sainsbury’s, Asda, and Morrisons telling to make sure their own houses were in order. It threatened to take enforcement action if there were any irregularities.
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