News

Supermarkets and the competition commission

04/10/10

Eight Northern Ireland supermarkets have been identified by the UK Competition Commission as operating under anti-competitive exclusivity agreements.

They were found by the Commission to have arrangements with landowners which the Commission said "prevent, restrict or distort" competition.

Following an order made by the Competition Commission in the last few days, the supermarket multiples — of which Tesco, Asda and Sainsbury’s all operate in the Northern Ireland — now have five years to lift the exclusivity arrangements.

Three Sainsbury’s supermarkets were found to have the anti-competitive arrangements in place — a store in Newry’s The Quays Shopping Centre in an agreement with landlord Parker Green International, a second unit in Ballymena’s Braidwater Retail Park, belonging to Sam Morrison, and a third in Armagh’s The Mall Shopping Centre, owned by Drumragh Property Investments.

Four Tesco stores also had similar arrangements — in Portadown Meadow Centre, with landlord Turret Investments, Abbey Retail Park in Newtownabbey, in Limavady with landlord Sean Mullan and Son and in Cookstown, in an agreement with landowner Norman Menary. One Asda supermarket in Downpatrick also had the restriction in place, which was granted by landlord J and H Miskelly.

The commission also identified stores carrying exclusivity arrangements deemed not to restrict competition, including Sainsbury’s stores in Coleraine and Craigavon.

No-one from Tesco was available for comment — but a spokesman for Asda said the operator was considering the views of the Commission. A spokeswoman for Sainsbury’s said, "We are constantly working to ensure that we are compliant with all aspects of this legislation and the Competition Commission’s recommendations and will do so within the timelines foreseen."

Glyn Roberts, chief executive of the Northern Ireland Independent Retail Trade Association, welcomed the requirement that supermarkets would have to lift exclusivity arrangements.

"We are pro-choice and pro-competition and want a diverse independent retail sector which offers real choice of independents and a choice of multiples."

Stephen Deyermond of commercial property consultants TDK said many exclusivity agreements dated back to the presence of supermarkets such as Dunnes and Wellworths in shopping centres, where they wanted to protect their interests.

"Many supermarkets have sought them for the best of intentions — you don’t want to set up somewhere and invest millions of pounds into an area and then find your competitor moving in next door.

"Such an agreement as Sainsbury’s in Armagh would not be unusual and it would only apply to The Mall. Asda and Tesco are both keen to open in Armagh but it’s only a lack of available sites which is stopping them. It is a town where it is difficult to piece together five or six acres."

The measures against restrictive covenants and exclusivity are the latest salvo in a two-year investigation by the Commission into the grocery industry.
A spokesman said: "This will ensure that in future large grocery retailers face sufficient competition in all local areas to the benefit of consumers."

Read more on the Belfast Telegraph website

Report by Margaret Canning found in Belfast Telegraph on Tuesday, 17 August 2010