Sainsbury’s and Asda Warned Against Blocking Rival Stores, Consumer Choice at Stake

13 June 2023

Sainsbury’s and Asda have been cautioned by the Competition and Markets Authority (CMA) to cease employing “unlawful” land agreements that prevent competitors from opening stores near their own locations. The CMA argues that such practices may have restricted consumer choice and hindered access to more affordable prices.

Both Asda and Sainsbury’s downplayed the breaches, characterizing them as “technical” and asserting that they did not harm consumers. It is worth noting that Tesco and Waitrose had previously faced reprimands from the regulator for similar actions.

The CMA’s latest intervention takes place amidst ongoing investigations into supermarkets by the competition watchdog, focusing on high food and fuel prices.

According to the CMA’s findings, between 2011 and 2019, Sainsbury’s and Asda imposed restrictions on their owned land to prevent rival supermarkets from using it. They also utilized legal agreements to obstruct landlords from allowing competing stores on adjacent properties.

The regulator stated that Sainsbury’s violated the Groceries Market Investigation (Controlled Land) Order 2010 on 18 occasions, while Asda committed the offense 14 times.

David Stewart, the executive director of markets and mergers at the CMA, emphasized the illegality and detrimental impact of such restrictions, particularly during a period when families are grappling with their weekly grocery bills. Stewart noted, “With families under increasing pressure, it is even more critical that competition between supermarkets is helping people to get the best deal.”

Sainsbury’s has agreed to remove the identified restrictions from its land agreements, as pointed out by the CMA. Asda, on the other hand, has already resolved the issues related to the restrictions found within its land agreements.

A spokesperson for Sainsbury’s highlighted that the regulator identified “minor, unintentional technical breaches” that did not undermine competition in the grocery market. They emphasized that the breaches constituted a small percentage, less than 1%, of its relevant land agreements over a span of more than a decade. The spokesperson added, “We have cooperated fully with the CMA throughout this process, and we are now resolving these issues, as well as taking steps to ensure this does not happen again.”

An Asda representative stated, “We have reviewed details of over 1,600 property-related transactions, which identified 14 issues. All of these relate to legacy transactions that occurred between 2011 and 2019 when Asda was under different ownership, and involve technical errors in documentation that have all been resolved. We have also taken action to strengthen our CLO-related training and guidance.”

The CMA previously took action against Tesco in 2020 for 23 breaches of land rules and against Waitrose in 2022 for seven breaches.

With grocery price inflation on the rise, concerns have been raised about whether supermarkets are passing on the benefits of falling wholesale food costs to consumers. However, grocers have denied allegations of profiteering, and the British Retail Consortium has emphasized that stores are working diligently to keep prices “as low as possible.”

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