UK regulator raps Tesco for unlawfully preventing rival store openings

A company logo is pictured outside a Tesco  supermarket in Altrincham northern England.
A company logo is pictured outside a Tesco supermarket in Altrincham northern England, April 16, 2016. REUTERS/Phil Noble/File Photo

February 14, 2020

LONDON (Reuters) – Tesco <TSCO.L>, Britain’s biggest retailer, unlawfully stopped major supermarket rivals from opening shops near its stores, the country’s competition regulator said on Friday.

The Competition and Markets Authority (CMA) said it first discovered that Tesco had been preventing landlords from letting property to other supermarkets during monitoring in 2018.

Tesco then reviewed all of its land agreements, finding 23 breaches in total.

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

Tesco trades from 3,787 stores in the UK and Ireland, employing 340,000.

“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,” Tesco said, noting the discovered breaches represented 0.4% of 5,354 land deals reviewed.

The CMA said Tesco has agreed to take remedial action for all affected agreements and improve its internal processes and staff training to avoid future breaches.

The regulator plans to monitor Tesco’s progress and may take formal enforcement action if further breaches are found.

It is also writing to six other supermarket groups – Sainsbury’s <SBRY.L>, Walmart <WMT.N> owned Asda, Morrisons <MRW.L>, Marks & Spencer <MKS.L>, Waitrose and the Co-operative Group <42TE.L> – asking them to show that their land agreements are not in breach.

The CMA warned if any group is not compliant, it will consider taking enforcement action.

Gomes da Silva said the CMA wants the ability to fine businesses if it finds they are in breach of its orders and has asked the government for more powers.

(Reporting by James Davey; editing by Alistair Smout and Louise Heavens)