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The Groceries Market Investigation (Controlled Land) Order 2010 was introduced to stop grocery retailers benefitting from long exclusivity arrangements and restrictive covenants. Such provisions can stifle competition from other grocery retailers.
The Competitions & Markets Authority (“the CMA”) recently published a letter, which they issued to Tesco, recognising how Tesco committed numerous breaches of the Order within their real estate agreements. This letter has been a significant wake up call for large grocery retailers in the UK who now have to act on any potential breaches of the Order to avoid remedial directions being issued by the CMA. The Order sets out that all “large grocery retailers” must use best endeavours to release certain restrictive covenants as specified in the Order.
The CMA found that many of Tesco’s breaches were caused by renewing agreements entered into before the Order was implemented without checking the terms were compliant. There is now increased pressure for “large grocery retailers” in the UK to scrutinise all of their existing arrangements entered into since 2010, and if applicable, to take steps to release landlords from any long exclusivity arrangements and restrictive covenants. Robust checks must be introduced to ensure all real estate agreements going forward comply with the Order.
This article has been produced for general information purposes and further advice should be sought from a professional advisor. Please contact our Commercial Real Estate team at Cleaver Fulton Rankin for further advice or information.