Tesco 'limited competition' claim
The Competition Commission has provisionally ruled that the purchase of the store in Slough, Berks, in 2003, by the UK's largest supermarket group, has resulted in a "substantial" lessening of competition in the area. The Office of Fair Trading referred Tesco to the Competition Commission in April after it failed to find a buyer for the site it had been told to sell in 2004.
Tesco purchased the former Co-op store, just 800 metres from its existing shop in the town, to trade from as it developed its original site. It was then due to sell the grocery shop after it moved back to its original store. However, the group has been developing the site into four smaller units and the Competition Commission has raised concerns that the new development will not be sufficient to attract a sizeable enough competitor. It ordered Tesco to stop working on the development last month. Inquiry group chairman and Competition Commission chairman Peter Freeman 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 identified a number of potential buyers over the years - including our main rivals - but most were prevented from buying by the OFT on competition grounds," it said. "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 and that will achieve our shared goal of selling the site as quickly as possible."
The Competition Commission is currently investigating Tesco along with the other major supermarket retailers, as part of a probe into the wider grocery industry. The regulator is looking at supermarkets' dominance on a local scale. This is the second time this week that Tesco has been named by regulators, after the OFT accused a number of supermarkets and dairy producers of colluding to fix the price of milk, butter and cheese during 2002 and 2003.
Tesco has vowed to "vigorously defend" itself against the allegations.