Game could be up on stores’ monopoly

Feb 16 2008 by Paul James, The Journal

VILLAGERS in Northumberland were celebrating last night after the Competition Commission signalled an end to a supermarket’s monopoly in their communities.

The commission published its long-awaited recommendations for the £95bn grocery sector after a two-year study into local monopolies, land banks and planning guidelines.

And three Northumberland villages were identified among 35 areas across the country where restrictive covenants imposed on buildings by dominant stores were a barrier to new rival shops opening.

The commission has provisionally ruled that the supermarkets responsible for all 35 covenants should legally remove them, meaning the Co-op will have to remove the orders on land in Belford, Seahouses and Rothbury.

The Co-op is the dominant food shop in each of the villages, and over recent years has come under fire for buying up and closing down other stores.

Villagers said the ruling was a “damning indictment” of the monopolies imposed on families who are forced to pay over the odds for food to shop locally.

The commission report said: “In relation to the 35 restrictive covenants referred to in paragraph 54 above, we have therefore provisionally decided to require the grocery retailer that benefits from the restrictive covenant in question to release the burdened party from the restrictive covenant by entering into a deed of release.

“In addition, the grocery retailer should make a full and proper application to the Land Registry to remove the restrictive covenant from the Charges Register. In the interests of achieving a timely remedy, we have provisionally decided that the grocery retailers should take these steps as soon as possible.”

It added: “Given that our analysis of restrictive covenants has shown them to constitute a barrier to entry wherever they are in place... we do not consider it necessary to require the OFT to demonstrate a specific effect on grocery retailing before the retailer releases the burdened party from the restrictive covenant.”

Geoff O’Connell, who represents Belford on Berwick Council, said: “The findings are a damning indictment and endorse our long-held view that we’ve been held to ransom by the creation of these monopolies. This is great news for many villages and small communities in Northumberland. It is worth noting that these are provisional recommendations, awaiting the full report in April.”

Berwick MP Alan Beith added: “I very much welcome this report which seeks to tackle issues which have been of real concern in several communities in Northumberland. I will be studying it in detail and pressing the Government to take it seriously.”

However, there was bad news for those fighting for the Co-op to release a building on the High Street in Wooler, classed by the commission among nine ‘land bank’ sites across the country that have prevented new shops opening. The Co-op used to trade from the building but moved into the new store after buying out rival Alldays.

But the report ruled it would be inappropriate to impose new restrictions on the land bank sites or to force them to be released.

It said: “Although we have provisionally found nine land bank sites that are acting as barriers to entry in areas of high concentration, we do not consider it appropriate to put in place a remedy specifically designed to deal with land bank sites.”

The commission wants an independent ombudsman appointed to oversee the UK’s supermarkets and the creation of a “competition test” for planning decisions involving new, large grocery stores.

A spokeswoman for the Coop said: “We cannot comment until we have had time to study the findings which were just made public late this afternoon.”