Supermarket giants, including Waitrose and Morrisons, have welcomed the competition watchdog’s decision to crack down on Aldi and Lidl.
Lidl and Aldi are currently excluded from a law which bans the UK’s biggest supermarket chains from engaging in so-called ‘landblocking‘. Top grocers have already warned that the existing rules allowed the two German discounters to use a “problematic” loophole to block rivals from opening nearby.
However, the competition regulator is now set to force the two grocers to comply.
The Competition and Markets Authority (CMA) on Thursday confirmed its provisional decision to extend the Controlled Land Order to cover Aldi and Lidl.
The pair had previously been excluded from the rules because they were classed as “limited assortment discounters”. But the CMA has said it will now categorise the two firms as “large grocery retailers” because of their rapid expansion in recent years.
Lidl and Aldi will join Asda, Co-op, Marks & Spencer, Morrisons, Sainsbury’s, Tesco and Waitrose in being blocked from using these land laws to gain an advantage over their rivals.
Budget supermarket Iceland, which is not covered by the land order, welcomed the CMA’s provisional decision.
In a letter to the regulator, published on Thursday, the company said existing rules allowed Aldi and Lidl to “deploy problematic land arrangements […] at scale and in a way that could have a material adverse impact on competition for groceries across the UK market”.
Though the two German discounters occupied a relatively small part of the UK’s grocery market when the Controlled Land Order was set up, the firms “now each exert a significant and compelling degree of competitive influence in the UK grocery market,” Iceland said.
Lidl and Aldi ‘shielded from competition’
Grocers Morrisons, Waitrose and Iceland each wrote to the CMA, expressing concerns that Lidl and Aldi are preparing to expand further in the UK, citing plans to reach 1,500 stores each.
Aldi and Lidl have previously claimed they should not be classed as large grocery retailers because they offer fewer products than their rivals.
But Morrisons told the CMA that both supermarket chains “publicly market their product range as being suitable for a full weekly shop” and pose “intense competition” even in the categories they claim to be weak in.
A Waitrose spokesperson wrote to the regulator, warning that it had seen “first hand” Lidl’s use of the land order to “restrict the ability of other grocery retailers to open new stores and shield Lidl from local competition”.
The up-market grocer said the CMA should impose its rulings as soon as possible. “It is important that these decisions are taken without further delay to ensure there is equal opportunity in the competition between LGRs and Aldi and Lidl to secure further sites for grocery retail.”
Juliette Enser, executive director for competition enforcement at the regulator, said the new rules will “help level the playing field and make sure shoppers get the best choice of products and prices in their area”.
Responding to the CMA’s provisional ruling in August, Lidl and Aldi said the crackdown would not slow their plans to expand rapidly in the UK.
Commenting on the decision, an Aldi spokesperson said: “We remain firmly committed to opening hundreds of new stores across the country, bringing Aldi’s unbeatable value and award-winning quality to even more customers.
A Lidl spokesperson said: “As a discounter, we have always welcomed and embraced competition within the market, and our focus remains on continuing to open new stores and bringing our high-quality, lowest-priced groceries to even more communities.”