Tesco wins appeal on competition

The grocery sector was referred to the Competition Commission in May 2006

Tesco has won an appeal against a report which proposed measures to curb the power of major supermarkets.

Tesco had challenged the Competition Commission's recommendation that a "competition test" be introduced when making planning applications.

The Competition Appeal Tribunal (CAT) ruled that the report had failed to consider certain relevant matters.

However, the Competition Commission said that the CAT had not challenged the rationale for a competition test.

The proposed test would come into force when supermarkets want to build new stores or extend existing ones. The Office of Fair Trading would have to be consulted on all planning applications and would apply a "competition test".

Applications from retailers that do not already have a store in the area, or where there is a choice of four or more different chains, would pass the test.

It was part of recommendations made by the Competition Commission in April last year, following a two-year investigation into the grocery sector.

The Competition Commission said it would study the judgment closely before deciding its next step.

It is possible that it could revive the test in a revised form.

The CAT said the Competition Commission had not taken into account the risk that the new test might have an adverse effect on customers.

For instance, it noted that if one retailer was blocked from developing a store, a replacement development by a different retailer might not occur.

Tesco said it was delighted with the judgment, calling it a "victory for common sense".

There will be another hearing on 16 March.

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