Competition watchdog proposes curbs on spread of 'Tesco towns'
By Andrea Felsted and Jim Pickard
Published: October 3 2009 03:00 | Last updated: October 3 2009 03:00
Tough curbs to rein in the spread of so-called "Tesco towns" were proposed by competition authorities yesterday, in spite of vehement objections from Britain's biggest retailer.
The Competition Commission recommended that the government introduce a test for planning permission decisions that would seek to curtail the dominance of any one supermarket in towns, improving choice for consumers.
The test - a key recommendation of the commission's two-year probe into the supermarket sector - would oblige local authorities to consider the relative local strength of retailers when deciding whether to grant planning permission for new, larger grocery stores or larger extensions.
The commission said the test would "bring in competition where it is lacking and . . . stop individual retailers consolidating strong positions in local areas to the detriment of consumers".
Analysts said that while the test would apply to all supermarket groups, Tesco, as market leader, had the most to lose.
Tesco said the commission had made the "wrong recommendation in this small but important aspect of its extensive inquiry".
Lucy Neville-Rolfe, Tesco's corporate and legal affairs director, called on the government to "think very carefully before proceeding with this recommendation and intervening aggressively in what is acknowledged to be a highly competitive industry, and deterring investment in these difficult economic times".
Asda, the UK's second-biggest supermarket chain, which stands to be a beneficiary of the test, welcomed it as a "modest proposal". It added: "Anyone opposing [it] is in effect opposing more competition."
The Association of Convenience Stores called on the government to implement the test, but warned it was "not a panacea for the competition failings".
However, analysts said that, with a general election looming, the test was unlikely to be implemented any time soon.
The Department for Business, Innovation and Skills said it would "consider carefully what a new competition test in the planning system for the largest grocery stores would mean for business, local authorities, consumers and communities, in conjunction with other recent planning policy developments".
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