Regulator criticises two supermarket giants over unlawful anti-competitive land agreements
The Competition and Markets Authority (CMA) has secured agreements from Sainsbury's and Asda to stop using unlawful anti-competitive land agreements that prevent competitors from establishing stores near to their own supermarkets.
An investigation by the CMA found that Sainsbury's and Asda had signed land agreements that were in breach of the Groceries Market Investigation (Controlled Land) Order 2010, which aims to limit large grocery retailers' ability to prevent land from being used by competing grocers.
Specifically, the order bans new restrictive covenants prohibiting land from being used for a supermarket. It also bans Exclusivity Arrangements longer than five years that prevent landlords from allowing competing stores in the same block as an existing supermarket.
The order applies to Tesco plc, J Sainsbury plc, Wm Morrison Supermarkets plc, Asda Stores plc, Co-operative Group Limited, Waitrose Limited and Marks and Spencer plc.
The CMA found that Sainsbury's had breached the order 18 times between 2011 and 2019, while Asda breached the order 14 times in that same period.
In response to the findings, Sainsbury's has agreed to remove the outstanding restrictions the regulator identified from its land agreements to become compliant with the order, and the restrictions identified within Asda's land agreements have now been removed.
Commenting on the breaches, David Stewart, Executive Director, Markets and Mergers at the CMA, said: "Restrictions of this nature are against the law, cause real harm to shoppers and will not be tolerated. This is particularly important at a time when many families are struggling to pay their weekly grocery bills.
Stewart added: "With families under increasing pressure, it is even more critical that competition between supermarkets is helping people to get the best deal.
"This enforcement action today is part of our wider action to tackle the cost of living and ensure that families really benefit from more competition."
A Sainsbury’s spokesperson said: “We acknowledge the CMA’s comments about the recent review of our land agreements, which identified a small number of instances that we consider to be technical breaches of the Controlled Land Order (CLO). They amount to less than 1% of our relevant land agreements to which the CLO applies, which have been made over the course of more than a decade.
“These are minor, unintentional technical breaches and did not impact our ability or that of our competitors to operate or compete in any way. We have cooperated fully with the CMA throughout this process and we are now resolving these issues, as well as taking steps to make sure this does not happen again.”
A spokesperson for Asda said: "We have worked collaboratively with the CMA as part of their ongoing market review of historic CLO compliance across the grocery retail sector. We have reviewed details of over 1,600 property related transactions which identified 14 issues. All of these relate to legacy transactions that occurred between 2011 and 2019, when Asda was under different ownership, and involve technical errors in documentation that have all been resolved. We have also taken action to strengthen our CLO-related training and guidance.”
Adam Carey
