Tesco steps up war on planning curbs
TESCO, Britain’s dominant supermarket, will this Tuesday fight a Competition Commission ruling that threatens to restrict its ambitious store-opening plans.
At the hearing of the Competition Appeals Tribunal (CAT) in London, Tesco will appeal against a recommendation made by the Commission earlier this year to introduce a “competition” planning test. The recommendation followed a two-year investigation into the grocery sector.
The proposed test would mean that consideration of a planning application made by a supermarket would be based on the number of the retailer’s stores compared with the number of rival supermarkets within a 10-minute drive.
This would mean Tesco would not be able to open new space in an area it already dominated.
Those in favour of the test believe it would reduce the emergence of so-called Tesco-towns, where the consumer has little choice of shop.
Tesco has roughly 2,290 UK stores and plans to add 120 by the end of February.
Rival grocers Asda, Marks & Spencer, and Waitrose will oppose Tesco’s case against the proposed test.
Tesco argues that the test would introduce more bureaucracy into an already complex planning system, and could jeopardise long-term regeneration schemes.
A Tesco spokeswoman said: “We think decisions should be made by local people, not a regulator in London who has not visited an area.”
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The Competition Commission’s latest inquiry into the grocery market was triggered by a referral from the Office of Fair Trading after the Association of Convenience Stores (ACS) complained that supermarkets were unfairly damaging their businesses.
The ACS will also fight Tesco’s appeal this week.
Sainsbury’s will also be in the spotlight this week when it delivers its half-year figures on Wednesday. City analysts predict underlying profits for the half-year will be between £260million and £277million, compared with £240million last year.
The supermarket has been caught in a ferocious price war with rivals such as Tesco and Morrisons. All sides have been forced to reduce prices to attract increasingly price-conscious shoppers.
Despite the profits rise, Sainsbury’s could have performed better, according to Pali International analyst Nick Bubb, who predicts half-year profits of £277million.
“That’s better than Marks & Spencer,” he said, “but worse than Morrisons. Sainsbury’s needs to push on the bottom line, as margins aren’t good enough.”
Sainsbury’s has seen an 8 per cent increase in sales of products on its fresh food counters in recent weeks as shoppers try to minimise waste by ordering only the quantities they need.
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