Sainsbury’s and Asda ordered to end unlawful land agreements by CMA

The Competition and Markets Authority (CMA) has directed Sainsbury’s and Asda to cease using “unlawful” land agreements that may have hindered rival supermarkets from opening stores nearby. The regulator claims that such practices could have limited consumer choice and access to lower grocery prices. Both Sainsbury’s and Asda have downplayed the breaches, describing them as “technical” and not detrimental to consumers.

Previously, the CMA had reprimanded Tesco and Waitrose for similar actions. The latest directive comes amidst ongoing investigations into supermarkets by the competition watchdog over high food and fuel prices. The CMA found that between 2011 and 2019, Sainsbury’s and Asda restricted land use to prevent rival supermarkets from opening nearby and legally blocked landlords from allowing competing stores on the same block as their existing shops.

David Stewart, executive director of markets and mergers at the CMA, said: “Restrictions of this nature are against the law, cause real harm to shoppers and will not be tolerated. This is particularly important at a time when many families are struggling to pay their weekly grocery bills.”

Sainsbury’s has agreed to remove the outstanding restrictions identified by the CMA from its land agreements, while Asda has already removed the restrictions from its agreements. A Sainsbury’s spokesperson stated that the regulator discovered “minor, unintentional technical breaches” that did not reduce competition in the grocery market. They added that the breaches were a “small number” and constituted less than 1% of relevant land agreements over more than a decade.

“We have co-operated fully with the CMA throughout this process and we are now resolving these issues, as well as taking steps to make sure this does not happen again.”

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An Asda spokesperson said: “We have reviewed details of over 1,600 property-related transactions which identified 14 issues. All of these relate to legacy transactions that occurred between 2011 and 2019, when Asda was under different ownership, and involve technical errors in documentation that have all been resolved. We have also taken action to strengthen our CLO-related training and guidance.”

In 2020, the CMA took action against Tesco for 23 breaches of land rules and against Waitrose in 2022 for seven breaches. Grocery price inflation has risen significantly in recent months, prompting questions about whether supermarkets are passing on falling wholesale food costs. However, the British Retail Consortium maintains that stores are working to keep prices “as low as possible.”