UK’s competition watchdog looks to cap supermarket expansion

Posted by James Ferre on 6th October 2009

The UK appears set to push on with plans to introduce a competition test to limit the proliferation of the major supermarkets.

The competition watchdog in the UK, the Competition Commission (CC), has formally recommended to the government that they take steps to introduce a competition test in planning decisions on larger grocery stores.

“The CC has been carrying out further analysis on the effectiveness, benefits, costs and proportionality of the competition test following a ruling by the Competition Appeal Tribunal (the Tribunal),” they advised. “The competition test would prevent supermarkets’ groceries developments, including extensions to existing stores, by retailers with a strong presence in a local area, to make competing developments from rival retailers easier.”

Plans for a test to prevent a retailer from gaining a presence in a region that is likely to be detrimental to competition were announced in the wake of a grocery inquiry that concluded last year. The inquiry, like Australia’s, suggested that there are competitive tensions in the marketplace but planning laws could be an area for improvement. In Australia, this has seen the gradual removal of restrictive leases and the likely introduction of creeping acquisitions law.

“We expect that the competition test will have the effect we intend by helping to bring in competition where it is lacking and to stop individual retailers consolidating strong positions in local areas to the detriment of consumers,” Peter Freeman, Chairman of the CC and Chairman of the Groceries Inquiry Group, said. ” Our detailed analysis has shown that the competition test is likely to have a positive effect for consumers by ensuring that they benefit from greater competition and choice between retailers both in their local areas and across the UK.”