The Competition Commissions final report into the groceries market was released this morning - and calls for the introduction of a new competition test for grocery stores at the planning stage.
In a report which focused on the needs of customers, the Commission concluded that while grocers are providing a good value, action is needed to improve local markets and relationships between suppliers and supermarkets.
For the supermarkets this will mean:
- a “competition test” for larger planning applications (a recommendation at the moment)
- action to prevent land agreements which prevent competition - most notably restrictive covenants on other sites
- the creation of a grocery supply code
- the introduction of an independent ombudsman to police the code.
In practice, this will mean the OFT becomes a statutory consultee on planning applications and will judge and report to the planning authority on an application’s ”competition test”.
The report will not mean any immediate sales of sites by big supermarkets chains, but in specified areas, there will be a requirement to release restrictive covenants within 6 months - and new restrictive covenants will be prohibited. These measures are designed to encourage the development of new supermarkets in areas previously dominated by a single supplier.
For more details - please contact Weber Shandwick on 020 7067 0341