Tesco rapped by watchdog over pressure to block rivals’ store openings

Tesco put unreasonable pressure on its landlords not to rent nearby sites to rivals for up to a decade, according to the competition watchdog.

The CMA said Tesco's actions could have left the public worse off. Picture: Jeff J Mitchell/Getty Images

The Competition and Markets Authority (CMA) said the supermarket may have reduced competition and left shoppers worse off.

The watchdog stopped short of fining Tesco because it is unable to do so under current powers but it has forced the supermarket chain to review its land agreements.

The CMA is also calling on other major supermarkets to make sure they don’t fall foul of rules.

The watchdog first discovered that Tesco had been preventing landlords from letting property to other supermarkets during monitoring in 2018. After this initial discovery by the CMA, Tesco reviewed all of its land agreements.

“It’s unacceptable that Tesco had these unlawful restrictions in place for up to a decade. By making it harder for other supermarkets to open stores next to its branches, shoppers could have lost out,” said the CMA’s head of markets and mergers, Andrea Gomes da Silva.

“In the future, we want the ability to fine businesses if we find that they are in breach of our orders. That’s why we’ve called on the UK government for more powers.”

Breaches are 'hangovers'

In a letter to Tesco boss Dave Lewis, da Silva said that for a company of its scale and resources, Tesco had shown “significant shortcomings”.

Tesco has now agreed to take remedial action for all affected land agreements, improve its internal processes and carry out staff training to avoid future breaches and ensure that all new land agreements are in line with the order. The CMA will monitor Tesco’s progress and may take formal enforcement action if further breaches are found.

Tesco said many of the breaches were hangovers from before new rules came into force in 2010. The supermarket blamed its mistakes on advisers it no longer works with.

A spokesman for the supermarket giant said: “We do not use restrictive property agreements. However, in a small number of historic cases between 2010-15, administrative errors by former advisers meant that our internal processes were not followed correctly.

“As the CMA recognises, we have worked collaboratively in resolving this, and our voluntary review of 5,354 land deals found isolated issues in just 0.4 per cent of these. We have since strengthened our controls and training, and are releasing the affected parties from all non-compliant terms.”

The CMA said it has written to Asda, the Co-op, M&S, Morrisons, Sainsbury’s and Waitrose to ask for proof that they have not committed similar breaches.