Tesco warned by UK CMA not to block rival store openings

17 February 2020 (Last Updated February 17th, 2020 12:10)

The UK Competition and Markets Authority (CMA) has told supermarket chain Tesco to refrain from blocking rivals supermarkets from opening stores.

Tesco warned by UK CMA not to block rival store openings
Credit: osde8info.

The UK Competition and Markets Authority (CMA) has told supermarket chain Tesco to refrain from blocking rivals supermarkets from opening stores.

The illegal practice of stopping rivals from opening near its stores was discovered by CMA during monitoring in 2018.

It was found that Tesco prevented landlords from letting property to competitors for grocery retailing in the future.

The move is deemed illegal under the Groceries Market Investigation (Controlled Land) Order 2010.

This discovery by CMA led to a review of all of Tesco’s 5,354 land agreements, where a total of 23 breaches were uncovered, including three restrictive covenants.

CMA Markets and Mergers executive director Andrea Gomes da Silva 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 agreed to improve its management and staff training to avoid future breaches. It also guaranteed to develop new land agreements that comply with the order.

Meanwhile, the regulator will follow Tesco’s progress on the issue and take formal enforcement action if further breaches are found.

In relation to this development, the CMA has also written to other supermarkets bound by the order to show their land agreements. The retailers include Waitrose, Sainsbury’s, Asda, Morrisons, M&S and the Co-op.

Earlier this year, Tesco was reported to face close scrutiny from a competition regulator in Thailand over the sale of its operations in the country.