Tesco Appeal to Competition Appeal Tribunal

30 Jun 2008

Tesco today launched a legal challenge against one of the remedies recommended by the Competition Commission in its latest inquiry into the grocery sector. Tesco is challenging the Commission’s proposal to introduce a ‘competition assessment’ into the UK planning system. The challenge has been brought in the Competition Appeal Tribunal.

The Commission, in its recent Groceries Market Investigation Final Report, recommended that:

The Department of Communities and Local Government (CLG), the Scottish Executive, the Welsh Assembly Government and the Northern Ireland Executive should take such steps as are necessary to make the OFT a statutory consultee to LPAs on all applications for planning permission, whether submitted by a grocery retailer or a third party, for development of a grocery store (including new stores and extensions) where that store had, or after the proposed scheme has been implemented will have, a net sales area in excess of 1,000 sq metres.

The OFT should provide advice to the LPA on whether a particular retailer has passed or failed a ‘competition test’. Applications would pass the test if within the area bounded by a 10-minute drive-time of the development site: the grocery retailer that would operate the new store was a new entrant to that area; or the total number of fascias in that area was four or more; or the total number of fascias in that area was three or fewer and the relevant grocery retailer would operate less than 60 per cent of groceries sales area (including the new store).

Tesco will argue that the recommendation does not address the underlying problem identified by the Commission in its report, namely the barriers to entry created by the planning regime. Tesco also considers that the Commission failed properly to assess the costs and benefits of the remedy, which if adopted, would place an artificial cap on organic growth.

Julian Gregory is instructed by Tesco.

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