Sainsbury's store outside

Sainsbury’s said its rule breaches were ‘technical’ and ‘unintentional’

Sainsbury’s and Asda have agreed to address more than 30 anti-competitive land deals that prevent rivals from opening nearby, following a CMA probe.

The Competition & Markets Authority found Sainsbury’s had breached rules 18 times between 2011 and 2019, while Asda had done so 14 times in the same period.

The unlawful agreements included clauses effective for five years or more preventing landlords from allowing competing stores on the same block as an existing supermarket, or restrictions on land owned by the supermarkets stopping rivals from using it.

Seven of the UK’s biggest grocers – Tesco, Sainsbury’s, Asda, Morrisons, Waitrose, M&S and the Co-op – have been banned since 2010 from having such restrictions in new property deals.

In 2020, after finding Tesco had breached rules 23 times, the CMA wrote to the other six retailers covered asking them to show their land agreements were not in breach. The Sainsbury’s and Asda breaches to emerge today are the latest outcome of that CMA action, intended to protect competition between businesses and keep prices down for supermarket customers.

It also brought seven breaches by Waitrose to light in 2022.

Sainsbury’s has agreed to remove the outstanding restrictions identified by the CMA, while Asda’s have already been removed.

The competition regulator has written to both supermarkets outlining the action agreed to prevent further breaches of the Groceries Market Investigation (Controlled Land) Order 2010.

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“Restrictions of this nature are against the law, cause real harm to shoppers and will not be tolerated,” said David Stewart, CMA executive director, markets and mergers.

“This is particularly important at a time when many families are struggling to pay their weekly grocery bills.

“With families under increasing pressure, it is even more critical that competition between supermarkets is helping people to get the best deal.

“This enforcement action today is part of our wider action to tackle the cost of living and ensure that families really benefit from more competition.

“We recently stepped up our work to assess whether any failure in competition is contributing to grocery prices being higher and we will be updating on this next month.”

Read more: Supermarkets delay complying with CMA call on restrictive land agreements

The CMA said that by making sure supermarkets competed freely, it was “ensuring that shoppers have more choice and so benefit from a wider range of groceries and access to cheaper prices – which is even more important as the cost of living rises”.

A Sainsbury’s spokesman said: “We acknowledge the CMA’s comments about the recent review of our land agreements, which identified a small number of instances that we consider to be technical breaches of the Controlled Land Order (CLO). They amount to less than 1% of our relevant land agreements to which the CLO applies, which have been made over the course of more than a decade.

“These are minor, unintentional technical breaches and did not impact our ability or that of our competitors to operate or compete in any way. 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.”

Nine of the 18 breaches identified at Sainsbury’s have so far been rectified.

An Asda spokesman said: “We have worked collaboratively with the CMA as part of their ongoing market review of historic CLO compliance across the grocery retail sector.

“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.”

The CMA is looking separately at whether any failure in competition is contributing to grocery prices being higher than they would be in a well-functioning market. It said today it had so far seen no evidence pointing to specific new competition concerns in the grocery sector, but it remained important to be sure weak competition was not adding to the cost of living.