Britain’s biggest retailer – which last year posted revenues of £51 billion and a pre-tax profit of £2.8 billion – sought the judicial review in opposition to a proposed competition “test”, which the Competition Commission has recommended should be applied prior to the
construction of any new supermarket.
The test was recommended by the commission following a two-year inquiry into the grocery sector.
If introduced, supermarkets could face planning restrictions in applications “if there is a high level of concentration [of the same brand] in the local market” and if the retailer making the application holds a substantial part of the local market.
Tesco’s corporate and legal affairs director Lucy Neville-Rolfe admitted: “The bureaucracy involved would increase delays and costs – and could even jeopardise long-term regeneration schemes.”
The retail giant currently has 2,115 stores in the UK but plans to open an additional 215,000 sq m of new space in the coming year.
But it may now have to take on Asda, Marks & Spencer and Waitrose in the courtroom after its rivals applied to speak at the three-day hearing, in a case being dubbed ‘Tesco versus the rest’.
Nigel Seay, a competition lawyer at legal firm Travers Smith, said: “Each intervener appears to be supporting the Competition Commission – so the case is very much shaping up as ‘Tesco versus the rest’ and this is also a good indicator that in practice the remedy will have a far greater impact on Tesco than anyone else.
“There is a real question as to whether this is an appropriate role for competition law to play.
“Arguably it creates a worrying precedent and, as Tesco has indicated in its appeal, amounts to a regulatory cap on the organic growth of successful firms.”
In its response to the commission’s inquiry, the Government indicated it would await the conclusion of Tesco’s legal challenge – as well as the Department for Communities and Local Government consultation on revisions to town centre planning policy – before deciding whether it will adopt the recommendation.
If Tesco is unsuccessful, it is understood a competition test could be introduced as early as next April.
The case will be heard by the Competition Appeals Tribunal from November 11.