A day after the dust has settled on the Competition Commission’s provisional findings report, retail executives at the big four supermarkets have a lot to think about.

In many areas of the inquiry, Competition Commission chairman Peter Freeman gave Tesco, Morrisons, Sainsbury’s and Asda an easy ride.

Freeman was soft on a broad range of areas, including the big four’s pricing strategies, supplier relationships and their impact on smaller retailers and convenience stores.

Overall, he said the grocery sector was highly competitive and does a good job of serving consumers.

In fact, many saw the Commission’s report as giving the green light to the big four to build more large stores on edge-of-town developments by recommending changes to the planning system in those areas, although he stressed this was not the case.

However, other comments by Freeman, concerning land banking and the dominance of some retailers in certain areas of the country, suggest it is premature for the big four to be cracking open the champagne just yet.

Above all, the possible remedy that will worry the big four – all of which have so-called landbanks – the most, is the forced sale of their stores and sites in areas where they dominate.

Freeman said the four supermarkets may have to sell up to 40 stores and 110 land sites between them, in an effort to increase competition. However, he stressed that forced divestments of property are a “last resort”.

The forced divestment of 40 stores is hardly earth-shattering, but the ramifications of the Commission making such an explicit correlation between a supermarket’s dominant position in a local market and associated landbanks could be long-lasting.

Freeman and his team found that in up to 30 per cent of areas where a supermarket has a dominant position, the same grocer also has a “controlled landsite” – a site on which it does not trade, in the local area.

In short, in the Commission’s eyes, supermarkets would seem to use landbanks in certain areas to stifle competition.

Of all the big four, this explicit correlation will worry Tesco the most. It is likely that Tesco will find it harder to achieve a dominant position, as it has in towns such as Inverness and Bicester, without coming under fierce scrutiny.

Therefore, while Tesco executives and jubilant investors will have been pleased with the report, the provisional findings could come to be seen as a watershed for the UK grocery sector and Tesco in particular, in years to come.

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