Rival Supermarkets Could Be Given Permission To Challenge Plans For New Aldi And Lidl Stores

The traditional supermarket multiples could be granted fresh powers to open more stores in areas dominated by Aldi and Lidl.

The Telegraph: The Competition and Markets Authority (CMA) is reviewing the rules that restrict major supermarkets from blocking their rivals from opening stores nearby.

To protect competition for shoppers, the regulator’s restrictive land clauses mean supermarkets must allow rival stores to open nearby without opposition.

However, this order only applies to Tesco, Sainsbury’s, Morrisons, Asda, Waitrose, Marks & Spencer and Co-op. Aldi and Lidl are exempt, meaning they have been able to grow their number of stores without having to comply with the rule.

Under the regs, the 7 UK supermarkets are blocked from having contractual clauses in their store deals, blocking rivals having stores in the same area. All of them have been forced to review contracts to comply with the order, which the CMA said is designed so that “shoppers have more choice and so benefit from a wider range of groceries and access to cheaper prices”.

Supermarket bosses have become increasingly frustrated over what they claim is an unfair playing field with Aldi and Lidl, not subject to the same restrictions based on 2010 legislation

Discounters hold nearly 20% of UK grocery market and both plan hundreds more stores.

The report said that Aldi and Lidl have been using the same restrictive clauses to block competitors from opening stores near them in retail parks.

Richard Walker, the Executive Chairman of Iceland, said last year that the discounters were using “legal tricks” to prevent rivals from moving into out-of-town shopping parks.

Officials have been asked to consider whether the rules should now include Aldi and Lidl or whether they should remove the bans for all supermarkets.

Supermarket insiders told the newspaper that they were hopeful that the competition regulator would decide to axe the restrictions altogether, given Labour’s push to cut red tape.

A CMA spokesperson is quoted as saying: “The Groceries Market Investigation (Controlled Land) Order plays an important role in maintaining competition between supermarkets, which is crucial to the finances of families across the country.

“We are aware of concerns that the Order should cover more supermarkets due to changes in the groceries sector, and we always keep this under review to ensure a level playing field.”

NamNews Implications:

• Inevitable that the government/legislation trails behind market realities.
• Inevitable that discounters’ growth in market share would reach this point.
• Inevitable that this planning clause includes discounter contracts…
• …to avoid the free-for-all that would inevitably result from removing the bans for all supermarkets.