The Competition Appeal Tribunal concluded that the Competition Commission did “not fully and properly assess and take account of the risk that the application of the test might have adverse effects for consumers”.
The tribunal said it recognised that “there are a good many reasons why, if one retailer is blocked from developing a store, a replacement development by a different retailer may not occur”.
Tesco executive director of corporate and legal affairs Lucy Neville-Rolfe said: “We are delighted with the judgment, which is a victory for common sense, and endorses our view that the proposed competition test was ill-founded. This has been a long journey. The inquiry started in 2006, and the Commission concluded almost a year ago that on the whole competition in the UK grocery industry is effective and delivers a good deal for customers.”
She added: “A new test in the planning system would increase costs and make the process even slower and more bureaucratic. It would be particularly perverse to introduce a test that would block investment in the current economic climate.
“The finding reinforces the importance of undertaking a robust cost benefit analysis on any new significant regulation. We would now like to draw a line under this and get back to focusing on customers in these challenging times."
Tesco appealed to the tribunal in June 2008 to challenge one of the remedies that the Competition Commission had recommended following a two-year long probe into the grocer sector.
Had Tesco's appeal been unsuccessful, it could have been prevented from opening new new supermarkets in areas where it has more than a 60 per cent share of the market.