Competition law—grocery retailers
Competition law—grocery retailers

The following Property guidance note provides comprehensive and up to date legal information covering:

  • Competition law—grocery retailers
  • Background
  • Competition test
  • Who is affected?
  • Which arrangements are caught?
  • Restrictive covenants
  • Exclusivity arrangements
  • Exclusions
  • Notifications information and directions

The Groceries Market Investigation (Controlled Land) Order 2010 made by the Competition Commission (whose functions were transferred to the Competition and Markets Authority (CMA) on 10 August 2010):

  1. requires the release of (and prohibits entry into) restrictive covenants, and

  2. prohibits the enforcement of (and prohibits entry into) exclusivity arrangements

restricting competition.

The CMA monitors the operation of the order which works in tandem with the regime under the Competition Act 1998. A provision may be caught by either or both.

Background

The Competition Commission made the order following its investigation into the supply of groceries by retailers in the UK, on which it reported in 2008. It concluded that there were features of the market which prevented, restricted or distorted competition, causing a detrimental effect on consumers, including:

  1. high levels of concentration in local markets for the supply of groceries by mid-sized and large grocery stores

  2. the control of land by incumbent retailers in those markets. Certain large grocery retailers were buying up land (land banking) and securing restrictive covenants blocking sites that might be suitable for competing large grocery development

Competition test

The competition test, which operates from 1 July 2012, quantifies concentration in the relevant local market. Essentially, the retailer will fail the test if:

  1. three or less supermarkets operate in the local market, and

  2. the sales area