Tesco wins appeal against proposed supermarket ‘competition test’
- March 5, 2009
- Daniel Palmer
Tesco, the UK’s largest retailer, has won an appeal against a ‘competition test’ in the planning system, which would have seen permission of new supermarkets subject to an analysis of market share in the region.
The competition watchdog in the UK, the Competition Commission, came up with the new test to alleviate concerns about the proliferation of major supermarkets in the wake of an inquiry into the grocery sector.
The Competition Appeal Tribunal concluded that the Competition Commission did “not fully and properly assess and take account of the risk that the application of the test might have adverse effects for consumers.” They recognised that “there are a good many reasons why, if one retailer is blocked from developing a store, a replacement development by a different retailer may not occur.”
Lucy Neville-Rolfe, Executive Director of Corporate and Legal Affairs at Tesco, welcomed the findings. “We are delighted with the judgment, which is a victory for common sense, and endorses our view that the proposed competition test was ill-founded,” she said. “This has been a long journey. The Inquiry started in 2006, and the Commission concluded almost a year ago that on the whole competition in the UK grocery industry is effective and delivers a good deal for customers.”
“A new test in the planning system would increase costs and make the process even slower and more bureaucratic. It would be particularly perverse to introduce a test that would block investment in the current economic climate.”
The Competition Commission has suggested they will look at other ways to introduce a new competition test, after last week introducing a new code of conduct to help protect suppliers.
“The judgment has not questioned our findings in the groceries report nor our proposed measures. Specifically it has not challenged the rationale for a competition test to tackle local supermarkets monopolies or its design,” they noted. “The appeal was upheld on the narrow grounds that certain considerations about how the test would work and its costs and benefits should have been explored further in the report.”
“We are keen to maintain progress with all the measures and recommendations that resulted from our report and are in the process of consulting on those actions designed to address problems in the supply chain.”