CMA mulls ending Aldi and Lidl’s exemption from land rules amid supermarket pressure
Britain’s largest supermarkets are set to be granted new powers to open more stores in areas where Aldi and Lidl dominate
Britain’s largest supermarkets are set to be granted new powers to open more stores in areas where Aldi and Lidl dominate, as the Competition and Markets Authority (CMA) considers imposing new restrictions on the German discounters.
The CMA, which regulates monopolies in the UK, is understood to be reviewing the current rules that prevent major supermarkets from blocking competitors from opening nearby, according to the Telegraph.
These regulations, known as restrictive land clauses, currently require supermarkets to allow rival stores to open without interference.
However, these rules have only applied to Britain’s biggest retailers, including Tesco, Sainsbury’s, Morrisons, Asda, Waitrose, M&S, and Co-op.
While German discount giants Aldi and Lidl have been exempt from these restrictions, allowing them to expand their presence across the UK without the same limitations.
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Under the current regulations, the seven major UK supermarkets are prohibited from including contractual clauses that would prevent competitors from setting up stores in the same location. As a result, these retailers have had to review their store contracts to ensure compliance with the rules, which the CMA says are designed to benefit consumers by providing greater choice and lower prices.
Yet, supermarket executives have grown increasingly frustrated with what they describe as an “unfair playing field” in comparison to Aldi and Lidl.
When the rules were put into place in 2010, the German discounters had a relatively small presence in the UK, which is why they were not included in the restrictions. Since then, Aldi has grown to become the fourth-largest UK grocer, overtaking Morrisons, and Lidl is now the sixth-largest. Together, the two chains now account for nearly 20% of the UK grocery market.
Aldi currently operates more than 1,200 stores, while Lidl has over 960, compared to Asda’s 1,100 and Sainsbury’s 1,400 locations. Both Aldi and Lidl have ambitious plans to open hundreds more stores in the coming years.
Retail executives are now raising concerns that Aldi and Lidl are using restrictive clauses in their own contracts to block competitors from opening near them in retail parks. Iceland boss Richard Walker said last year that the discounters were using “legal tricks” to prevent rivals from moving into out-of-town shopping centres.
The CMA is understood to be reviewing these concerns, with supermarket leaders urging the competition watchdog to reconsider the current framework. The question being asked is whether the rules should now include Aldi and Lidl, given their significant growth, or if the restrictions should be lifted entirely for all supermarkets.
The CMA has indicated it is keeping the situation under review to ensure the rules continue to encourage fair competition. Supermarket insiders are hopeful that the CMA will decide to scrap the restrictions altogether, especially following Labour’s recent push to ease regulatory burdens.
A CMA spokesman said: “The Groceries Market Investigation (Controlled Land) Order plays an important role in maintaining competition between supermarkets, which is crucial to the finances of families across the country. We are aware of concerns that the Order should cover more supermarkets, due to changes in the groceries sector, and we always keep this under review to ensure a level playing field.”
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