Berwin Leighton Paisner, a law firm representing the UK’s largest supermarket chain, has revealed to the North Norfolk district council that Tesco entered into a contract with council prohibiting the sale of council land to the retailer’s competitors. These so-called land banking practices are to form the central focus of the Competition Commission inquiry into the UK grocery sector.
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The district council launched the inquiry after it learnt that it was unable to sell council land to Budgens. Council officers, it was revealed, had signed an agreement with Tesco in 2003 barring the sale of land to Tesco’s competitors.
It is believed that the company has signed a number of similar restrictive covenants with various local authorities across the UK.
A Tesco spokesperson today (26 June) played down the impact that such deals would have on restricting competition. “We aren’t telling competitors not to come into any given area,” the company representative told just-food. “These agreements relate specifically and solely to the sale of council land.”
“We work constructively and openly with planners and local authorities to develop stores that are needed and are popular with communities. The agreement with North Norfolk district council was entered into freely by both parties and did not in any way prevent competition in the town,” Tesco said in a statement in response to the news.
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By GlobalData“It simply required the landowner, in this case the local authority, to support the significant investment being made by Tesco above other schemes involving other land owned by them. It in no way restricted the authority’s role in the planning process or prevented them from supporting proposals from other supermarkets on privately owned land,” the company concluded.
However, despite the retailer’s damage control, the revelation clearly comes at a bad time for Tesco with increased public scrutiny of the dominance of supermarkets and the CC investigation examining barriers to competition in the UK grocery market.
