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How the cost of living is focusing attention on anti-competitive practices

View profile for Phil Hunt
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The Competition and Markets Authority (CMA) is seeking to protect supermarket shoppers by securing agreements from Sainsbury’s and Asda to stop using anti-competitive land agreements.  On 13 June 2023, the CMA published letters that it sent to Asda and Sainsbury’s in relation to breaches of the Groceries Market Investigation (Controlled Land) Order 2010 (the Order). 

The purpose of the Order is to prevent control of land by a small number of large retailers.  The Order banned large retailers from preventing a piece of land being used as a supermarket by a rival business, and also prohibited the large retailers from agreeing long term exclusivity agreements with landowners.  This means that the large supermarket chains cannot prevent other land from being used by their competitors.  The CMA wants supermarkets to compete more freely, thus ensuring that shoppers have more choice and access to cheaper prices, which is of course more important as the cost of living rises.

The CMA wrote to all retailers within the scope of the Order and asked them to assess their own compliance with the law.  As a result, it was established that Sainsbury’s had breached the Order 18 times between 2011 and 2019, and Asda had breached the Order 14 times between 2011 and 2019.  All of Asda’s breaches have now ceased, and Sainsbury’s have so far ceased nine breaches with the promise of addressing the remaining nine.

Such enforcement action is nothing new.  The CMA took similar action for breaches of the same rules by Tesco in 2020 for 23 breaches and Waitrose in 2022 for seven breaches.

Whilst each of these supermarkets has co-operated with the CMA, it is of concern that such breaches of the Order are occurring.  The Order has been in force since 2010, and it is a serious shortcoming that such well-resourced businesses are not complying with rules intended to protect their customers.

The CMA is currently assessing whether any failure in competition is contributing to grocery prices being higher than they would be in a well-functioning market.  At this stage the CMA has not seen evidence pointing to specific new competition concerns in the grocery sector, but it is important to be sure that weak competition is not adding to the cost of living.

While the CMA does not currently have the power to impose financial penalties on those who breach the Order, it expects to be provided with this power in the future.  Such enhanced CMA powers would increase incentives for businesses to comply with competition rules going forward, and hopefully help to ease the cost of living crisis for all consumers.

With the present focus on compliance with the Order, it is important that businesses obtain sound advice when negotiating land agreements.  If you require assistance in relation to a land agreement, please contact Beth Margetson, Phil Hunt or Jack Cook.