Supermarkets Land Acquisition Comes Under Scrutiny

The U.K. competition regulator advised that planning laws could be changed to prevent local dominance by food retailers such as Tesco and ensure consumer choice. In a press release the Competition Commission said that Local authorities granting planning permits should be encouraged to favor chains that operate outside their areas.

The commission launched its inquiry into the £120billion grocery sector in May 2006. The full findings of this latest investigation will not be published until next year but the initial findings show that number of supermarkets owned by the big four has more than doubled since 2000, reflecting both the opening of new stores and the acquisition of rival chains.

Tesco currently holds a large 31% share of the market and the top fourof Tesco, Asda, Sainsbury's and Morrisons together control some 75% of the market.
The proposals suggested this week will include the possible scrapping of the "needs test", where local authorities consider whether a town or district needs another supermarket. Addressing the problem of "landbanking", buying up land and sitting on it rather than developing the plot, to prevent rivals getting it. The commission will also seek to put an end to "restrictive covenants" - supermarkets selling land with the condition that it cannot be used by a rival grocer.