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Tesco blocked rival supermarkets opening near its stores

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14/02/2020
Tesco stopped competitors from opening near its stores, meaning shoppers had less choice and were possibly left worse off.

The supermarket giant was found to have prevented landlords from letting property to other chains for up to a decade, a move which is unlawful under the Groceries Market Investigation Order.

The Competition and Markets Authority (CMA) initially discovered one breach in 2018 and a review of 5,354 land agreements by Tesco found an additional 22 breaches.

However, the CMA noted that in the majority of cases, the breaches were caused by Tesco renewing agreements that were entered into prior to the Order coming into force (2010).

Tesco has now agreed to take remedial action for all affected land agreements; improve its internal processes and staff training to avoid future breaches and ensure that all new land agreements are in line with the Order.

The CMA will monitor Tesco’s progress and may take formal enforcement action if further breaches are found. However, it is unable to impose fines.

It is also writing to all other supermarkets bound by the Order (Waitrose, Sainsbury’s, Asda, Morrisons, M&S and the Co-op), asking them to show that their land agreements aren’t in breach. If any supermarket is not compliant, the CMA will consider taking enforcement action.

‘Shoppers could have lost out’

Andrea Gomes da Silva, executive director, markets and mergers at the CMA 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.”

A Tesco spokesperson, said: “We do not use restrictive property agreements. However, in a small number of historic cases between 2010-15, administrative errors by former advisers meant our internal processes were not followed correctly.

“As the CMA recognises, we have worked collaboratively in resolving this, and our voluntary review of 5,354 land deals found isolated issues in just 0.4% of these. We have since strengthened our controls and training, and are releasing the affected parties from all non-compliant terms.”

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