CMA action on supermarkets protects competition and choice for shoppers
Sainsbury’s and Asda agree to address more than 30 anti-competitive land agreements which prevent rivals opening nearby
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The Competition and Markets Authority (CMA) has taken action to protect supermarket shoppers by securing agreements from Sainsbury’s and Asda to stop using unlawful anti-competitive land agreements. These unlawful agreements include placing restrictions on land they own from being used by a rival supermarket, or imposing restrictions lasting 5 years or more that stop landlords from allowing competing stores on land in the same block as an existing supermarket.
The CMA found that the retail giants, who respectively hold the second and third highest market shares in the UK’s £188.1bn supermarket industry, breached the Groceries Market Investigation (Controlled Land) Order 2010, which was brought in to stop supermarkets imposing new restrictions that stop rivals from opening competing stores nearby. By ensuring supermarkets compete freely, the CMA is ensuring that shoppers have more choice and so benefit from a wider range of groceries and access to cheaper prices – which is even more important as the cost of living rises.
The CMA found that:
- Sainsbury’s breached the Order 18 times between 2011 and 2019
- Asda breached the Order 14 times between 2011 and 2019
Sainsbury’s has agreed to remove the outstanding restrictions the CMA identified from its land agreements to become compliant with the Order. The restrictions identified within Asda’s land agreements have now been removed. The CMA has written to both parties outlining the breaches and the action agreed to prevent further breaches.
David Stewart, Executive Director, Markets and Mergers at the CMA said:
“Restrictions of this nature are against the law, cause real harm to shoppers and will not be tolerated. This is particularly important at a time when many families are struggling to pay their weekly grocery bills.
“With families under increasing pressure, it is even more critical that competition between supermarkets is helping people to get the best deal.
“This enforcement action today is part of our wider action to tackle the cost of living and ensure that families really benefit from more competition.
“We recently stepped up our work to assess whether any failure in competition is contributing to grocery prices being higher and we will be updating on this next month.”
Today’s action is part of a specific programme of activity by the CMA to enforce the Order’s rules on land agreements, and thereby protect competition between businesses and keep prices down for supermarket customers. This includes action on similar breaches of the same rules by Tesco in 2020 for 23 breaches and Waitrose in 2022 for 7 breaches.
The CMA is currently undertaking a separate piece of work to assess whether any failure in competition is contributing to grocery prices being higher than they would be in a well-functioning market. At this stage the CMA has not seen evidence pointing to specific new competition concerns in the grocery sector, but it is important to be sure that weak competition is not adding to the cost of living.
Notes to editors:
- For more information about the limits on large grocery retailers’ ability to prevent land being used by their competitors for grocery retailing in the future, please read: Groceries Market Investigation (Controlled Land) Order 2010 and the CMA’s guidance on Land Agreements.
- The Order banned new restrictive covenants, which prohibit land from being used for a supermarket, when it came into force in 2010.
- The Order also banned Exclusivity Arrangements (which prevent landlords from allowing competing stores in the same block as an existing supermarket) which were over 5 years long.
- There are 7 designated large grocery retailers that the order currently applies to: Tesco plc; J Sainsbury plc; Wm Morrison Supermarkets plc; Asda Stores plc; Co-operative Group Limited; Waitrose Limited; Marks and Spencer plc.
- The CMA’s letters sent to Asda and Sainsbury’s are publicly available and set out the CMA’s responses to their respective reported breaches.
- The CMA’s assessment of land deals by other supermarkets covered by the Order is ongoing.
- While the CMA does not currently have the power to impose financial penalties on those who breach CMA competition remedies, it expects that the Digital Markets, Competition and Consumers Bill, which is currently in Parliament, to provide it with this power in the future. Such enhanced CMA powers would increase incentives for businesses to comply with CMA competition remedies going forward.
- For media enquiries contact the CMA press office on 0203 738 6460 or press@cma.gov.uk