CMA: Aldi, Lidl Now Under Land Agreement Rules in UK

• The CMA has designated Aldi, Lidl GB, and Lidl NI as 'Large Grocery Retailers'.
• This designation subjects them to the Groceries Market Investigation (Controlled Land) Order 2010.
• The Order prevents supermarkets from using restrictive land agreements to block rivals.
• New agreements must comply, and existing ones can be reviewed by the CMA upon request.
• This aims to increase competition and consumer choice in the £222.7 billion UK grocery market.

For property lawyers and compliance officers working with Aldi and Lidl, a thorough review of current practices and existing land portfolios is now imperative.

The Competition and Markets Authority (CMA) has officially extended the scope of its land agreement regulations to include Aldi, Lidl GB, and Lidl NI, designating them as 'Large Grocery Retailers' (LGRs). This significant move places these discount supermarket chains under the purview of the Groceries Market Investigation (Controlled Land) Order 2010. The decision, announced recently, aims to foster greater competition within the UK's substantial grocery retail sector, valued at an estimated £222.7 billion.

This designation means that Aldi and Lidl are now subject to the same stringent rules that have applied to other major supermarket chains, such as Asda, Co-op, Marks and Spencer, Morrisons, Sainsbury’s, Tesco, and Waitrose, since the Order's inception in 2010. The primary objective is to prevent these retailers from utilizing land agreements to impede the establishment of rival stores in their vicinity, thereby ensuring a more level playing field across the industry.

The CMA's proposal to include Aldi and Lidl under the Order was first put forth in August, inviting feedback from interested parties. Notably, other prominent retailers including Morrisons, Waitrose, and Iceland expressed their support for the CMA's initiative. Conversely, neither Aldi, Lidl GB, nor Lidl NI submitted any representations regarding the proposed designation during the consultation period. This unanimous support from competitors underscores the perceived need for broader application of these competition rules.

The Groceries Market Investigation (Controlled Land) Order 2010 was originally established following an extensive investigation into the groceries market by the Competition Commission, the predecessor organization to the CMA. Its core function is to prohibit designated grocery retailers from engaging in land agreements that could detrimentally affect market competition. Specifically, the Order targets practices such as the inclusion of restrictive covenants and exclusivity arrangements within property contracts, which historically have been used to block competitors from opening stores nearby.

For lawyers advising Aldi or Lidl, this designation carries immediate and significant implications. All new land agreements entered into by these retailers must now strictly comply with the Order, meaning they cannot contain any prohibited restrictions. Furthermore, existing agreements are not immune; they can be subjected to review by the CMA if a request is made by interested parties, including landowners, property developers, or rival supermarkets. This mechanism provides a crucial avenue for challenging potentially anti-competitive clauses already in place.

The Order's provisions are designed to ensure that supermarkets compete freely on merit, ultimately benefiting consumers through increased choice and potentially lower prices for groceries. Juliette Enser, Executive Director for Competition Enforcement and Markets at the CMA, emphasized that extending these CMA Aldi Lidl land agreement rules will help level the playing field, ensuring shoppers have access to the best selection of products and competitive pricing in their local areas.

The inclusion of Aldi and Lidl, both significant players among the top five retailers by market share in the UK, under these stringent land agreement rules is a pivotal development for grocery retail competition law. It signifies the Competition and Markets Authority's commitment to maintaining a dynamic and competitive market, especially given the substantial economic value of the sector. By preventing these rapidly expanding chains from leveraging land agreements to stifle competition, the CMA aims to safeguard consumer interests and promote a more diverse retail landscape.

For property lawyers and compliance officers working with Aldi and Lidl, a thorough review of current practices and existing land portfolios is now imperative. Ensuring adherence to the Groceries Market Investigation (Controlled Land) Order 2010 is critical, particularly concerning any clauses that could be interpreted as supermarket restrictive covenants UK or exclusivity arrangements. The potential for rival supermarkets or landowners to request CMA review of non-compliant agreements means proactive compliance is essential to mitigate legal risks and avoid enforcement actions.

This regulatory expansion underscores the evolving landscape of grocery retail in the UK, where even successful challenger brands like Aldi and Lidl are now held to the same competition standards as long-established market leaders. The overarching goal is to ensure that market dominance, regardless of how it is achieved, does not translate into anti-competitive practices that limit consumer choice or inflate prices, reinforcing the importance of the Large Grocery Retailers designation.

Lawyers advising Aldi or Lidl must ensure all new and existing land agreements comply with the Groceries Market Investigation (Controlled Land) Order 2010, particularly regarding restrictive covenants and exclusivity arrangements. Property lawyers and compliance officers should review their practices, as rival supermarkets and landowners can now request CMA review of non-compliant agreements.

Source: Original reporting via the Competition and Markets Authority