Sainsbury’s, Asda told to stop restricting opening of nearby rival stores

Sainsbury’s and Asda have been warned by the Competition and Markets Authority (CMA) to cease the use of “unlawful” land agreements that restrict rival supermarket chains from opening stores near their own locations.

The CMA claims that such agreements have limited consumer access to a wider range of grocery options and potentially hindered the availability of lower-priced products, BBC reported today (13). While Sainsbury’s and Asda downplay the breaches, considering them to be technical in nature and without any harm to consumers, this latest action by the CMA follows prior reprimands against Tesco and Waitrose for similar practices.

Between 2011 and 2019, both Sainsbury’s and Asda employed restrictions on land they owned, preventing competitors from utilizing it for supermarket purposes. Additionally, legal agreements were utilized to block landlords from leasing spaces within the same block as existing stores to competing retailers. The CMA has identified 18 breaches by Sainsbury’s and 14 breaches by Asda of the Groceries Market Investigation (Controlled Land) Order 2010.

David Stewart, the CMA’s executive director of markets and mergers, emphasized that such restrictions are against the law, negatively impacting shoppers, especially during a time when families face challenges in meeting their grocery expenses. Stewart highlighted the significance of fostering competition between supermarkets to ensure consumers receive the best possible deals. In response to the CMA’s findings, Sainsbury’s has committed to removing the identified restrictions from its land agreements, while Asda has already taken steps to rectify the issues in its agreements.

Sainsbury’s defended itself by stating that the CMA had identified only minor, unintentional technical breaches that did not undermine competition in the grocery market. The supermarket acknowledged a small number of breaches, amounting to less than 1 per cent of its relevant land agreements over a span of more than a decade, and assured its cooperation with the CMA throughout the process.

Asda, on the other hand, explained that the identified issues stemmed from legacy transactions that occurred between 2011 and 2019 under previous ownership. The supermarket emphasized that these technical errors in documentation had been resolved, and measures were taken to enhance compliance-related training and guidance.