The Competition Commission has called for a ‘competition test’ in a bid to increase competitiveness in the UK supermarket industry but fell short of recommending forced land sales or wholesale changes to the ‘town centre first’ planning policies.

In its publication on Friday, which followed its initial findings in October that parts of industry restricted competition, it said local planning authorities should carry out the ‘competition tests’ when deciding planning applications for large grocery stores.

Prevention of restrictive covenants

It also recommended other measures including the prevention of exclusivity arrangements and restrictive covenants being used by retailers to restrict entry by competitors; the creation of a new strengthened and extended Groceries Supply Code of Practice), and a recommendation to establish an independent ombudsman to oversee and enforce the code.

The commission said its proposed remedies would be ‘practical and effective’ and ‘to the benefit of customers’.

Limited changes to planning system
It said it had decided against changes to the ‘need’ test or ‘Town Centre first’ policy because ‘relevant government departments are already intending to make changes to planning affecting grocery retailing’.

In a decision that will be good news to retailers such as Tesco it said it would not force sales of stores or land holdings because ‘it believes that the measures proposed will be sufficient and proportionate in addressing its concerns about existing and future competition in local markets’.

The remedies follow discussions between the commission and retailers, suppliers, trade associations, the OFT and other government departments. Interested parties will have a further opportunity to comment before the commission publishes its final report deciding which remedies will be introduced at the end of April.