Tesco said it failed to find a buyer that met competition approval

The Competition Commission said that the purchase of the Slough store in 2003 resulted in a "substantial" lessening of competition in the area.

The Office of Fair Trading referred it to the commission after Tesco was told in 2004 to sell the site but failed to.

Tesco said it failed to find a buyer that met competition approval.

Tesco, the UK's largest supermarket group, purchased the former Co-op store, just 800m (875yds) from its existing shop in the town, to trade from as it developed its original site.

'Better shopping'

It was due to sell the shop after it moved back to its original store, but the group had by that time started developing the site into four smaller units.

The Competition Commission raised concerns that the new development would not be sufficient to attract a sizeable enough competitor and ordered Tesco to stop working on the development last month.

Peter Freeman, inquiry group and Competition Commission chairman, said: "Tesco's own internal assessment and the evidence of both stores' performance shows that, under another owner, the Co-op store was the main potential competition to its existing store.

"We will now look to discuss what action we can take with regard to the Co-op site and restoring competition."

Tesco said it had been working to sell the Co-op site, but had failed to find a buyer that met competition approval.

"We want to continue with the redevelopment of the [Co-op] site in order to make shopping even better for local people and we will work with the commission to do so in a way that they find acceptable," it said.