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Tesco Appeal To Competition Appeal Tribunal On Planning Remedy

Tesco has today launched a legal challenge to one of the remedies recommended by the Competition Commission in its latest inquiry into the grocery sector. Tesco has lodged its application with the Competition Appeal Tribunal (CAT), to challenge the Commission's proposal to introduce a 'competition assessment' into the UK planning system. One of the main points in the judicial review is that the competition test does not remedy the adverse effect on competition identified by the Commission.

Commenting on the appeal Corporate and Legal Affairs Director Lucy Neville-Rolfe said:

"We are pleased that once again, the Commission has found that the groceries sector is broadly competitive and delivers a good deal for customers.

We are appealing on just one aspect of the final report and remedies. The competition test would not address the planning barrier identified. Perversely, it would introduce another barrier into the planning process. The bureaucracy involved would increase delays and costs - and could even jeopardise long term regeneration schemes - at a time when Tesco is working hard to keep prices low for customers.

Planning decisions should be taken by local people who understand what their community needs, and it is a matter of principle to Tesco that customers, not regulators, should decide where we shop."

ENDS

Notes to editors

1. This is an application under Section 179 of the Enterprise Act 2002

2. The application is directed to one of the remedies – a 'competition test' – recommended by the Commission.

3. Many of the findings of the Commission were positive:

a. 'In many important respects competition in the UK groceries industry is effective and delivers good outcomes for customers'.

b. There had been a moderate growth in the number of convenience stores, and a more significant growth in their revenues. 'To the extent that [Sainsbury and Tesco's entry] has resulted in increased competition, consumers will have benefited.'

c. There was no basis for a number of the specific concerns which had been expressed about the competitive position of convenience stores. The pattern of below-cost selling by the larger retailers was not predatory and unlikely to have an adverse effect on competition. Vouchering campaigns represented 'effective competition between retailers that benefits consumers by reducing their shopping bill'. There was no basis for either the 'waterbed' or the 'tipping point' theories

d. There were no 'competition concerns that applied to Tesco over and above other grocery retailers….Tesco's position is not insurmountable'.

e. Grocery retailers were not engaging in holding banks of undeveloped land as a strategy to impede entry by rivals. Their land holdings were, in the main, in areas where the retailer did not have a strong presence.

4. The Commission had some concerns in relation to supplier relationships, restrictive covenants and exclusivity agreements. The remedies to address these issues are not the basis of this appeal.