Competition watchdog raps Co-op over scale of its compliance breaches

The competition watchdog has rapped Manchester’s Co-op Group over breaches to guidelines introduced in 2010.

The order by the Competition Markets Authority was aimed at stopping big supermarkets having uncompetitive land agreements that prevented other competing stores from opening nearby with restrictive covenants.

The CMA contacted all major UK supermarkets in 2020 asking them to demonstrate they were compliant after it found Tesco had 23 unlawful restrictions in place.

It emerged that the Co-op was the biggest transgressor, with 107 breaches.

The Co-op has since addressed 104 of these and has pledged to resolve the remaining three.

But in an open letter to Co-op chief executive, Shirine Khoury-Haq, CMA senior director markets, Daniel Turnbull, has expressed his concern over the sheer scale of the breaches, and called on the retailer to act swiftly to resolve the remaining instances.

He wrote: “I am writing to express the CMA’s concern that Co-operative Group Limited has breached the Groceries Market Investigation (Controlled Land) Order 2010 on 107 occasions.

“The Order was put in place to prevent Large Grocery Retailers, like Co-op, from benefitting from long exclusivity arrangements and restrictive covenants.

“In February 2020, following the CMA’s determination that there had been several breaches of the Order by another Large Grocery Retailer, the CMA wrote to all retailers within the scope of the Order, including Co-op, to ask them to assess their compliance with the Order and report to the CMA.

“The CMA’s assessment has identified 107 breaches of the Order by Co-op since the Order came into force (three of which remain ongoing at the date of this letter).”

He went on: “The CMA acknowledges that Co-op has proactively taken steps to address the root causes of these breaches, has cooperated with the CMA to date and is now working with the CMA to take further remedial action to address the breaches identified.

“Along with other Large Grocery Retailers, Co-op will now also report annually to the CMA regarding its compliance with the Order.

“Nevertheless, the CMA is concerned by the very large number of breaches, which the CMA considers demonstrates significant failures in compliance for a business of Co-op’s size, resources and standing, particularly given that the Order has been in force since 2010.

“Following extensive engagement between the CMA and Coop, the CMA now expects Co-op to move swiftly to rectify all three outstanding breaches.”

A Co-op Group spokesperson said: “As a business that is committed to operating fairly, we recognise this is extremely disappointing.

“Co-op operates in a range of markets, both as a community retailer and a national funeral provider and the number of breaches amount to less than two per cent of transactions across our entire property portfolio.

“This is a matter we take very seriously, and we have taken all necessary action to ensure this issue is resolved and does not happen again.”

In response to the CMA’s call in 2020, it was found that Morrisons had committed 55 breaches, Sainsbury’s 18, Asda 14, M&S ten and Waitrose seven. They all agreed to rectify any outstanding breaches.