Tesco ‘unlawfully’ blocked rivals from opening stores, CMA finds

The supermarket giant has vowed to stop its “anti-competitive restrictions” following a probe by the Competition and Markets Authority (CMA) and its own internal investigations.

Tesco said it has reviewed more than 5,300 leases after the CMA first discovered that the grocer had been preventing landlords from letting property to other supermarkets back in 2018.

Following the review, Tesco found a total of 23 breaches, including 20 lease agreements that allowed the retailer “exclusive rights” to sell groceries in certain areas for longer than the five-year period permitted under the Groceries Market Investigation (Controlled Land) Order 2010.

The watchdog is also writing to other grocers – including Sainsbury’s, Asda, Morrisons, the Co-op, M&S and Waitrose – asking them to show that their land agreements are not in breach of the order.

Reduced competition

The CMA said that Tesco’s actions “may have reduced competition” and “lowered choice” for consumers in impacted streets across the UK, including London’s Great Suffolk Street, Mile End Road and New Cavendish Street.

Shopping thoroughfares in Reading, Epsom, Plymouth, Northampton and Halifax were among the other areas affected.

Andrea Gomes da Silva, executive director of 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.

“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.”

The CMA admitted that “the majority” of breaches came as a result of Tesco renewing leases that were initially entered into prior to new regulations coming into place

Tesco blamed the errors on “administrative errors by former advisors”.

A Tesco spokeswoman said: “We do not use restrictive property agreements. However, in a small number of historic cases between 2010-15, administrative errors by former advisors meant that 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.”

The CMA said it would “monitor Tesco’s progress” and could take “formal enforcement action” if it discovered any future breaches.