Tesco wins appeal

Tesco has won its appeal against the introduction of a "competition test" to limit retail expansion, but the Competition Commission (CC) has vowed to continue pursuing the proposal.

Tesco has won its appeal against the introduction of a "competition test" to limit market domination, but the Competition Commission (CC) has vowed to continue pursuing the proposal.

The CC made the recommendation for a supermarket competition test in its April 2008 report 'The supply of groceries in the UK: market investigation', which was published following a lengthy inquiry into the grocery sector.

The test would ensure that local planning authorities withheld planning permission for the construction or expansion of a large grocery store if there was already a high level of concentration in the local market for large grocery stores and the retailer applying for permission had, or would have had, a substantial part of the market.

Tesco challenged the lawfulness of the recommendation with the Competition Appeals Tribunal (CAT), which yesterday found in favour of the retailer, concluding that the CC did "not fully and properly assess and take account of the risk that the application of the test might have adverse effects for consumers."

Lucy Neville-Rolfe, executive director of corporate and legal affairs at Tesco, said: "We are delighted with the judgment, which is a victory for common sense, and endorses our view that the proposed competition test was ill-founded.

"A new test in the planning system would increase costs and make the process even slower and more bureaucratic. It would be particularly perverse to introduce a test that would block investment in the current economic climate."

However, a spokesperson for the CC said that the Commission will not abandon the recommendation, pointing out that the CAT judgement did not challenge the rationale for a competition test.

"The appeal was upheld on the narrow grounds that certain considerations about how the test would work and its costs and benefits should have been explored further in the report," he said. "We will now study the judgement closely before deciding our next steps."

The tribunal is expected set out what the CC must do to proceed with its competition test reccomendation at a further hearing scheduled for 16 March.

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