Competition Commission: big supermarkets could be forced to sell landbanks

The Competition Commission has said the biggest supermarkets may be forced to sell their landbanks in its eagerly anticipated provisional findings of its grocery inquiry.

Competition Commission chairman Peter Freeman said: “We are concerned that retailers could be using existing land holdings and restrictive covenants to frustrate potential competition.” Restrictive covenants concern land or stores that are sold on the condition that they are not used by rivals.

In the possible remedies section of the 270-page report, the commmission said: “Grocery retailers may have to divest land holdings in areas where concentration is weak.” It also expressed concern about the ability of grocery retailers to transfer excessive risk and costs to suppliers through purchasing practices, such as retrospective charges to supplier agreements.

Freeman hinted at reforming the Supermarkets Code of Practice, when he said: “While the Code of Practice does have some effect, it does not entirely prevent the potential harm.”

The commission also raised the prospect of introducing a competition test that would aim to stimulate a broader representation of retailers in areas where one or more retailers has a dominant presence. “In a number of local areas, more competition would benefit consumers both locally and more generally,” said Freeman.

However, the early report dismissed the suggestion that big supermarkets target small retailers and convenience stores unfairly. Freeman said that “on most counts”, the grocery market serves consumers well in terms of value, choice, innovation and convenience.