Tesco unlawfully leaned on its landlords not to rent nearby sites to rivals for up to a decade, the competition watchdog has said, as it forced the supermarket chain to review its land agreements.
The Competition and Markets Authority (CMA) said the supermarket may have reduced competition and left shoppers worse off.
The watchdog stopped short of fining Tesco because it is unable to do so under current rules.
“It’s unacceptable that Tesco had these unlawful restrictions in place for up to a decade. By making it harder for other supermarkets to open stores next to its branches, shoppers could have lost out,” said the CMA’s head of markets and mergers, Andrea Gomes da Silva.
“In the future, we want the ability to fine businesses if we find that they are in breach of our orders. That’s why we’ve called on the Government for more powers.”
In a letter to Tesco boss Dave Lewis, Ms da Silva said that for a company of its scale and resources, Tesco had shown “significant shortcomings”.
After being contacted by the CMA, Tesco found that there were problems in 23 of its 5,354 land agreements. Many of the breaches were hangovers from before new rules came into force in 2010. The supermarket blamed its mistakes on advisers it no longer works with.
Tesco said: “We do not use restrictive property agreements. However, in a small number of historic cases between 2010-15, administrative errors by former advisers meant that our internal processes were not followed correctly.
“As the CMA recognises, we have worked collaboratively in resolving this, and our voluntary review of 5,354 land deals found isolated issues in just 0.4% of these. We have since strengthened our controls and training, and are releasing the affected parties from all non-compliant terms.”
The CMA said it has written to Waitrose, Sainsbury’s, Asda, Morrisons, M&S and the Co-op to demand proof they have not committed similar breaches. It will consider taking action if any are not compliant.