The chairman of Iceland has accused the Competition & Markets Authority of handing Aldi and Lidl a “free pass” in supermarket land rules.
Richard Walker said the CMA was “kicking this bucket down the road” by putting off its conclusion of a review of competition rules that apply to nearly all major supermarkets but not Aldi and Lidl.
Under rules introduced in 2010, Tesco, Sainsbury’s, Morrisons, Asda, Waitrose, Marks & Spencer and Co-op are all banned from writing clauses into property deals that block rival stores from opening nearby.
But Aldi and Lidl are not covered by the rules, as their market shares were much smaller at that time. It means there are no rules against them using the clauses to block nearby competition.
The CMA launched its review last spring after supermarket bosses expressed frustration at the differing treatment. Companies were initially told to expect an update in autumn, then informed by the CMA in October that it would complete its review by the end of the year.
In an update this week, the CMA told The Grocer it had to gather and analyse information from a wide range of sources and now expected the assessment to conclude later this year.
“The CMA has given the German discounters another free pass by kicking this bucket down the road,” Walker told The Grocer.
“At a time when economic growth is sorely needed, I can’t understand their tepid thinking.”
Walker, who was appointed a Labour peer in December, has previously accused Aldi and Lidl of using restrictive clauses in deals to block competition on retail parks.
Mark Jones, partner at law firm Gordons, said the two discounters could have grounds to challenge a move to add them to the 2010 Controlled Land Order, by arguing they do not meet the criteria.
The Order applies to “large grocery retailers” and says the term “grocery store” means “a retail store, a significant proportion of which is devoted to the sale of groceries, but excludes stores operated by limited assortment discounters and frozen food retailers”.
Jones said: “The big, hovering question is, have they stepped outside of that into full-range grocery retailers?”
The definition also means Iceland is not covered by the Order.
Aldi said it was a limited assortment discounter, as defined in the Order, and this meant it sold the same limited core range in all stores. It said it therefore had a different operating model to other, larger supermarkets, which sold significantly more products.
However, Aldi is understood to not be in discussions with the CMA over the Order.
It said it was subject to and complied with general competition law relating to land agreements
Lidl was approached for comment.
Since 2020, the CMA has named and shamed Tesco, Sainsbury’s, Asda, Morrisons, Co-op, M&S and Waitrose for breaching the Order with land deals containing restrictive covenants.
Meanwhile Aldi and Lidl are both rapidly opening stores as they chase their goal of having 1,500 UK supermarkets each.
Aldi currently has about 1,080, having opened about 40 last year. It plans open another 40 this year in a £370m investment announced this week.
Lidl opened its 1,000th UK store in November and is also planning to add 40 to its estate this year.
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