Big four may be forced to sell land

Source: Retail Digital

Date :01/11/2007 09:14:22

Following an 18-month inquiry into the grocery market, a provisional report by the Competition Commission has said that planning laws need to be overhauled to improve competition in the sector.

The commission said that it had identified 200 locations across the country where competition could be improved.

"In most areas shoppers have a good choice and benefit from the strong competition between retailers, but in a number of local areas more competition would benefit consumers both locally and more generally," said Competition Commission Chairman Peter Freeman.

Land sell-off

The main concern identified was that retailers may be using their land holdings to prevent competitors from building nearby stores – designed to stop ‘landbanking.’

The watchdog outlined its intention to stamp out this practice and said it had found that in towns where a single company dominates.

The commission identified 187 areas where a supermarket from the big four – Tesco, Asda, J Sainsbury and Wm Morrison – had both a dominant position within its local market and other substantial land-holdings that could be blocking competitors, such as convenience stores, from building there.

Ultimately, supermarkets could be forced to sell off land where there is a low concentration of competing stores as well as reducing planning restrictions for supermarkets on the edge of town centers, the report said.

Local impacting

Moreover, the Competition Commission largely dismissed concerns about the impact supermarkets have on local retailers, saying that there was no evidence that the big grocers prevent independent stores from prospering.

"We do not see evidence of unfair distortions in competition between large grocery retailers and small stores," the report said.

In particular it found that supermarkets aren't engaged in a "predatory strategy" targeting smaller stores.

Market-leader Tesco saw its stock rise three percent to an all-time high of 488p.

However, Sainsbury’s fell 1.5 percent while Morrisons’ edged up 0.2 percent.

November 1 2007