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Groceries Market Investigation – Final Report

The Competition Commission (CC) published its final report in its inquiry into UK groceries retailing, including measures to improve competition in local areas and to address its concerns about relationships between retailers and their suppliers.

The measures include:

  • A recommendation for the inclusion of a ‘competition test’ in planning decisions on larger grocery stores;
  • Action to prevent land agreements which can restrict entry by competitors;
    The creation of a new strengthened and extended Groceries Supply Code of Practice; and,
  • A recommendation to establish an independent Ombudsman to oversee and enforce the Code.

In relation to local competition, the CC will implement the following measures:

  • Large grocery retailers will be required within six months of the date of the CC’s report to release the 30 existing restrictive covenants in highly-concentrated local markets that the CC has identified in its report.
  • Large grocery retailers with a strong local market position in a highly-concentrated local market may be required to release any existing restrictive covenants in that local market which may restrict grocery retailing or have equivalent effect and which were not notified to the CC, in accordance with a prescribed procedure involving an assessment by the OFT.
  • Large grocery retailers will be prohibited from imposing new restrictive covenants that may restrict grocery retailing or which have equivalent effect.
  • Large grocery retailers will be required not to enforce or seek the enforcement of any of the 30 existing exclusivity arrangements identified in the report where those arrangements have been in place for more than five years from the date of this report.
  • Large grocery retailers with a strong local market position in a highly-concentrated local market may be required not to enforce certain exclusivity arrangements in that local market which may restrict grocery retailing or have equivalent effect and which were not notified to the CC, in accordance with a prescribed procedure involving an assessment by the OFT.
  • Large grocery retailers will be required not to enforce or seek the enforcement of other exclusivity arrangements after the longer of five years from the date of this report or five years from the date the grocery store benefiting from the exclusivity opened.
  • Grocery retailers will be required to provide to the OFT on request accurate figures for the groceries sales area of any store in the UK, and any other information that the OFT may require for the application of the competition test.
  • Large grocery retailers will be required to notify to the OFT all acquisitions of existing stores of more than 1,000 sq metres net sales area.

Read more about the Competition Commissions plans for Future Food Stores and the proposed competition tests within our Comment, downloadable below.

Competition is to be a material consideration in deciding planning applications for new food stores. This paper covers findings of the final report into the Competition Commission’s investigation into the grocery market and sets out the potential tests that could be placed on the market.