Anti-competitive practice and land agreements
21 Sep 2022
The cost-of-living crisis has made the Competition and Markets Authority’s (CMAs) recent investigation into supermarkets’ land agreement practices even more important.
There have been long-standing concerns that larger retailers restrict competition through land agreements, by leaning on landlords, land banking practices and so on, preventing competition from other supermarkets who are therefore unable to open nearby, impacting consumer choice and price competition in local areas.
Breaches of competition guidelines by Tescos in 2020 lead to an investigation by the CMA. The investigation resulted in a broad request for information being sent to large retailer supermarkets such as Waitrose, Sainsbury’s, Asda, Morrisons, M&S and the Co-op asking for proof that they had not committed similar breaches.
The types of actions which would be in breach of CMA’s guidelines include retailers who ask for very long exclusivity arrangements and or impose restrictions such as a requirement that other tenants must purchase certain goods or services from one supplier, restrictions on the landlord to not allow a competing business within a certain geographic area and so on.
Whether a restrictive covenant restricts competition will be assessed based on the geographic area, the type of property within which the retailer is located, the length of time when the covenant exists, market power etc.
Following this investigation, Waitrose admitted to historic breaches across seven of its locations, which it has agreed to rectify.
Nevertheless, what has been shown by this current episode is that retailer competition, the price of food and consumer choice continue to be important political issues, requiring appropriate regulation.
Lawyers acting for larger retailers should be mindful of anti-competitive practices, which could result in large fines, closures or other regulatory action which may be costly and time-consuming.
For questions about any of the issues raised in this article, please contact Bhavini Kalaria at email@example.com or Robert Souber on Robert.firstname.lastname@example.org