Co-op Reevaluates Land Agreements Following Regulatory Breaches

UK supermarket Co-op addresses over 100 illegal land contracts after Competition and Markets Authority findings.

Co-op is in the process of amending more than 100 unlawful land agreements that have hindered rival supermarkets from opening in close proximity.

This action follows a determination by the UK's Competition and Markets Authority (CMA) that the retailer violated regulations intended to promote competitive market conditions across the country.

Since 2010, rules have prohibited large grocery retailers from imposing land restrictions that would stifle competition by preventing rivals from establishing stores in the same area.

The CMA has pursued actions against other major supermarket chains in recent years, with Tesco receiving scrutiny for 23 breaches, Sainsbury's for 18, and Morrisons for 55 instances of non-compliance.

In 2020, Tesco was found to have pressured its landlords not to lease nearby properties to competitors, with such agreements lasting up to a decade.

Similarly, in 2022, Waitrose acknowledged that it had entered into contracts with landlords aimed at obstructing new store openings in the same vicinity.

The number of restrictive agreements employed by Co-op reflects a significant failure to adhere to compliance standards commensurate with the company’s scale and market presence, as stated by the regulator.

Co-op has taken steps to rectify 104 of the agreements identified by the CMA and is working to resolve the remaining three.

Daniel Turnbull, senior director of markets at the CMA, emphasized the negative impact these restrictive agreements have on supermarket competition, which ultimately affects consumers in their search for better prices and services.

He acknowledged Co-op's extensive efforts to amend the agreements, given the long-standing nature of the regulations.

In response to the findings, a spokesperson for Co-op expressed disappointment.

The spokesperson noted that the number of identified breaches represents less than 2% of transactions across its entire property portfolio.

The company stated it is committed to fair operations and is taking all necessary measures to ensure compliance moving forward.