Tesco PLC Wins Competition Appeal

The CAT, presided over by Mr Justice Barling, concluded that the Competition Commission did “not fully and properly assess and take account of the risk that the application of the test might have adverse effects for consumers.

05/03/09 The Competition Appeal Tribunal has published its judgment on Tesco’s appeal against a ‘competition test’ in the planning system, and found in Tesco’s favour.

The CAT, presided over by Mr Justice Barling, concluded that the Competition Commission did “not fully and properly assess and take account of the risk that the application of the test might have adverse effects for consumers.” They recognised that “there are a good many reasons why, if one retailer is blocked from developing a store, a replacement development by a different retailer may not occur.”

The test was one of the main recommendations from the two-year-long inquiry into the UK grocery market conducted by the Competition Commission, which was completed last April. It was welcomed by Asda, Marks & Spencer and Waitrose, which backed the Competition Commission at the tribunal hearings, and by the Association of Convenience Stores (ACS), which represents thousands of small independent shopkeepers.

However, Tesco challenged the fairness of the proposed new test, and the Competition Appeals Tribunal has now upheld the supermarkets's complaints, saying the Commission failed to properly assess the implications of the proposed competition test.

Commenting on the judgement, Lucy Neville-Rolfe, Executive Director (Corporate and Legal Affairs at Tesco) said: “We are delighted with the judgment, which is a victory for common sense, and endorses our view that the proposed competition test was ill-founded. This has been a long journey. The Inquiry started in 2006, and the Commission concluded almost a year ago that on the whole competition in the UK grocery industry is effective and delivers a good deal for customers.

A new test in the planning system would increase costs and make the process even slower and more bureaucratic. It would be particularly perverse to introduce a test that would block investment in the current economic climate.

“The finding reinforces the importance of undertaking a robust cost benefit analysis on any new significant regulation. We would now like to draw a line under this and get back to focusing on customers in these challenging times.”