Businesses will be able to apply for the removal of land use restrictions which limit competition against supermarket giants. Image courtesy of sxc.hu/David Lebrero.
The Office of Fair Trading
(OFT) yesterday (June 20) announced that businesses will be able to apply for the removal of land use restrictions which limit competition
against seven of the UK’s largest grocery retailers.
The measures will take effect from July 1, 2012 with the intention of allowing consumers to benefit from increased local competition following the Groceries Market Investigation (Controlled Land) Order
made by the Competition Commission
in 2010. The investigation highlighted the existence of restrictive covenants, a legal obligation tied to a piece of land which forces the owner or occupier to take or not take some course of action as well as exclusivity arrangements. Such arrangements form an agreement between the landowner and grocery retailer, meaning that other grocery retailers are unable to operate from the same site, or limited in the extent to which they can do so.
This new procedure will involve the OFT testing the extent of competition in a particular local area when an application is made, and then determine whether a restrictive covenant or exclusivity arrangement in favour of Asda Stores Limited, Co-operative Group Limited, J Sainsbury plc, Marks and Spencer plc, Tesco plc
, Waitrose Limited or Wm Morrison Supermarkets plc should be removed.
The measures will provide a boost for UK small businesses and start-ups operating within the grocery sector and currently facing stifling competition from one of the seven supermarket giants listed above.
Further information about how the new procedure will operate and how businesses can set about applying for restrictions to be lifted in their area can be found on the OFT’s website