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Tesco under fire for blocking rival stores opening nearby

Most of the worst offending stores were Tesco Express outlets. Credit: PA

Tesco has come under fire for stifling competition in the grocery market for up to 10 years, preventing rivals from opening stores near their own.

The competition watchdog said it first approached the country's largest supermarket chain on the issue in 2018 after uncovering evidence it had been stopping landlords from letting property to rivals

The Competition and Markets Authority (CMA) said the supermarket may have reduced competition by unlawfully leaning on its landlords not to rent nearby sites to rivals, leaving shoppers worse off.

The watchdog stopped short of fining Tesco because it is unable to do so under current rules.

The CMA’s head of markets and mergers, Andrea Gomes da Silva, said: "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," she added.

The CMA has written to Waitrose, Sainsbury’s, Asda, Morrisons to demand proof they haven't breached land contracts. Credit: PA

Ms Gomes da Silva continued: "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 Government for more powers."

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

After being contacted by the CMA, Tesco found that there were problems in 23 of its 5,354 land agreements.

Many of the breaches were hangovers from before new rules came into force in 2010.

23
Tesco stores have breached their land agreements.

The supermarket blamed its mistakes on advisers it no longer works with.

Tesco 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% 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 Waitrose, Sainsbury’s, Asda, Morrisons, M&S and the Co-op to demand proof they have not committed similar breaches.

It will consider taking action if any are not compliant.