The Office of Fair Trading (OFT) has announced that, from 1 July 2012, businesses will be able to apply to it for the removal of land use restrictions which limit competition against any of the UK’s seven largest grocery retailers: Asda Stores Limited, Co-operative Group Limited, Marks and Spencer plc, Wm Morrison Supermarkets plc, J Sainsbury plc, Tesco plc, and Waitrose Limited.
This measure follows the Competition Commission’s investigation into the grocery market, which found that certain restrictive covenants and exclusivity arrangements protected supermarkets from local competition from rival grocery outlets. This new procedure allows these restrictions to be challenged.
When an application to remove a restriction has been made, the OFT will carry out a ‘local market share test’ to consider whether there is an appropriate level of local competition in the area before deciding whether to take action.
If the restriction fails the test set out in Schedule 4 of the Groceries Market Investigation (Controlled Land Order) 2010, the OFT cannot remove the restriction. However, the OFT can require the supermarket to use its best endeavours to remove the restriction and not to enforce exclusivity arrangements. If, having used its best endeavours, the supermarket cannot remove the restriction, then it must undertake not to enforce the restriction.
Full details on the procedure are here.