The Competition Commission has rejected claims that Tesco’s land holdings are allowing it to take an unfair advantage in the grocery retail market.
The commission this morning confirmed that the retailer holds the largest land bank in the UK, and said it would study the use of restrictive practices and ‘land banking’ further to see if there were impediments to competition.
But the commission also rejected fears that Tesco’s land bank would lead to market share of 45% in the next few years. It said: ‘The suggestion that Tesco can build on its owned land to achieve a 45% share of grocery retailing is not in our view, on present evidence, substantiated.’
In its Emerging Thinking report, it also flagged up several areas where the planning system could be used to discourage uncompetitive behaviour, although said there was no clear evidence to suggest that this was prevalent.
The report says that several grocery retailers complained of the duration and complexity of the planning process, which they said represented a barrier to entry, although it added that some proposals did not comply with local development plans.
The commission said it was still investigating whether grocery retailers seek to gain a competitive advantage through the planning system.
Issues include grocery retailers objecting to competitors’ planning applications, the submission of applications for store extensions in response to competitors’ applications for new stores, the threat of appeal against local planning authority decisions, and the lobbying and influencing of local government.
The commission largely rejects the assertion of the Barker Review that supermarket development in England and Wales is being restrained by the retention of the so-called need test to determine whether the store is needed and the prioritisation of town centres over other locations for retail development.
Peter Freeman, chairman of the commission, said: ‘Our principal concern now is to focus on competition between retailers at the local level, where it most matters to consumers, as this is where many of the potential concerns we have would be evident.
‘We know about the extent of retailers’ land holdings, but it’s how these are used at local level, and the related effect of the planning system, that matters. It would be a cause for concern if supermarkets, either individually or collectively, were in a position to increase prices or lower their offer in any particular locality or region because of lack of effective competition.
‘We are not here to punish success or individual retailers but we are concerned with whether Tesco, or any other supermarket, can get into such a strong position, either nationally or locally, that no other retailer can compete effectively.’