GovWire

The Competition and Markets Authority (CMA) has taken action to protect supermarket shoppers by securing agreements from Wm Morrison Supermarkets Limited (Morrisons) and Marks and Spencer plc (M&S) to stop using unlawful anti-competitive land agreements. These unlawful agreements include restrictions on land being used by a rival supermarket, or restrictions lasting five years or more that stop landlords from allowing competing stores to set up.

The CMA found that the retail giants, who respectively hold 8.6 per cent and 3.4 per cent market share in the UKs 188.1bn supermarket industry, breached the Groceries Market Investigation (Controlled Land) Order 2010. This was introduced to stop supermarkets imposing new restrictions that block rivals from opening competing stores nearby. By ensuring supermarkets compete freely, the CMA is ensuring that shoppers have more choice and so benefit from a wider range of groceries and access to cheaper prices which is even more important as the cost of living rises.

The CMA found that:

• Morrisons breached the Order 55 times between 2011 and 2020
• M&S breached the Order 10 times between 2015 and 2019

Morrisons currently has the poorest compliance record with the Order that the CMA has seen to date. Although 14 of these restrictions have ended, there are an outstanding 41 restrictions that Morrisons has agreed to address. Likewise, 5 of M&Ss restrictions have ended and it has agreed to address the remaining 5. The CMA has written to both supermarkets outlining the breaches and the actions agreed to improve compliance in the future.

Adam Land, Senior Director of Remedies Business and Financial Analysis at the CMA said:

At a time when the weekly shop is a source of financial pressure for many families, its crucial that competition between supermarkets is working well to help people get the best deals they can.

These restrictive agreements by our leading retailers are unlawful. There can be no excuses made for non-compliance with an Order made in 2010, especially when we know the positive impact for shoppers of new stores on the high street.

Our continued crackdown on these unlawful restrictions is part of our wider action to tackle the cost of living and ensure that people benefit from more competition and choice.

Todays action is part of a targeted programme of activity by the CMA to enforce the Orders rules on land agreements, and thereby protect competition between businesses and keep prices down for supermarket customers. This includes action on similar breaches of the same rules by Tesco in 2020 (23 breaches), Waitrose in 2022 (7 breaches) and Sainsburys and Asda in 2023 (18 breaches and 14 breaches respectively).

Separately, the CMA is undertaking a wider piece of work looking at competition in the groceries sector and has set out the latest findings and next steps in its ongoing review, assessing competition across the supply chain with a focus on branded and own-label food suppliers. This follows an earlier update on retail competition in the sector. More information can be found on the CMA website page on action to help contain the cost of living pressures.

Notes to editors:

1. For more information about the limits on large grocery retailers ability to prevent land being used by their competitors for grocery retailing in the future, please read: Groceries Market Investigation (Controlled Land) Order 2010 and the CMAs guidance on Land Agreements.

2. The Order banned new restrictive covenants, which prohibit land from being used for a supermarket, when it came into force in 2010.

3. The Order also banned Exclusivity Arrangements (which prevent landlords from allowing stores to compete with an existing supermarket) which were over 5 years long.

4. There are 7 designated large grocery retailers that the order currently applies to: Tesco plc; J Sainsbury plc; Wm Morrison Supermarkets Limited; Asda Stores plc; Co-operative Group Limited; Waitrose Limited; Marks and Spencer plc.

5. The CMAs letters sent to M&S and Morrisons are publicly available and set out the CMAs responses to their respective reported breaches.

6. The CMAs assessment of land deals by other supermarkets covered by the Order is ongoing.

7. While the CMA does not currently have the power to impose financial penalties on those who breach CMA competition remedies, it expects that the Digital Markets, Competition and Consumers Bill, which is currently in Parliament, will provide it with this power in the future. Such enhanced CMA powers will increase incentives for businesses to comply with CMA competition remedies going forward.

8. For media enquiries contact the CMA press office on 0203 738 6460 or press@cma

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