Grocers will face a clampdown on restrictive covenants under the Groceries Market Investigation (Controlled Land) Order 2010, which came into force last week.
The Competition Commission said big grocers such as Tesco, Asda, Sainsbury’s and Morrisons will not be allowed to deploy the controversial property deals to ensure competitors cannot open nearby.
They will also not be allowed to strike deals with landlords or councils to keep out rivals, or put conditions on the sale of sites preventing other retailers moving in unless that would be harmful to consumers.
The Competition Commission pointed out 50 deals by supermarkets that were deemed to have restricted competition.
The order is the latest measure arising from the Competition Commission’s two-year investigation into the grocery industry. Shore Capital analyst Clive Black said: “As with the general competitive nature of the industry, restrictive covenants were not as pervasive as many commentators and anti-supermarket interest groups claimed.”
He added: “The prohibition of certain restrictive covenants is not expected by us to have a material impact on retail development.”
Last month the Government gave the green light to the creation of an adjudicator to regulate relationships between suppliers and retailers. Black said: “There has been scant evidence of structural supplier abuse.”
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