Tesco 'Competion Test' Victory enables New Retail Planning Guidance to Move Forward

Tesco has successfully challenged the lawfulness of the proposed introduction of a ‘competition test’ which it the retailer said threatened to complicate the consideration of planning applications for large foodstores.

The aim of the competition test was to ensure that local planning authorities withheld planning permission for the construction or expansion of a large grocery store if there was already a high level of local concentration of large grocery stores, and the retailer applying for permission had (or would have had) a substantial part of the market. The Office of Fair Trading would be expected to provide advice to local planning authorities on whether a particular retailer has passed or failed the competition test. Applications would pass the test if within an area defined by reference to a 10-minute drive-time of the development site:
- the grocery retailer that would operate the new store was a new entrant to that area; or
- the total number of “fascias” in that area was four or more; or
- the total number of fascias in that area was three or fewer but the relevant grocery retailer would operate less than 60% of groceries sales area (including the proposed new development).

Tesco submitted that the Commission’s April 2008 recommendation failed to take proper account of all relevant considerations which ought to have formed part of its assessment. The Tribunal unanimously concluded that the Commission failed properly to consider certain matters which were relevant to its recommendation that the competition test be imposed as part of a package of remedies to address the adverse effect on competition that its investigations had identified. The Commission’s failures were sufficient to cast doubt on the robustness of its recommendations.

The decision will come as blow to Asda, Waitrose and M&S who, together with The Association of Convenience Stores, directly supported the Competition Commission in its efforts to defend the Tesco legal challenge.

The effects of the challenge had spilled over into the Government’s proposed revision of retail planning policy contained in Planning Policy Statement 6, Planning For Town Centres (March 2005). Somewhat controversially, the Government published proposed revisions to PPS6 in July 2008 without any reference to the proposed competition test because of the ongoing Tesco appeal case. Responses to the consultation exercise were summarised by Government in February this year. The consultation exercise teased out 368 responses in all, 190 of which provided a detailed critique. 17 retailers were moved to respond and there was an organised lobby which produced 178 identical submissions collectively calling for greater regulation of the grocery sector orchestrated by anti Tesco campaign group 'Tescopoly'.

A strong theme of the responses to PPS6's revision was criticism of the lack of detail relating to proposed Practice Guidance which is to accompany the policy statement.

"The absence of practice guidance setting out how the policy should be interpreted makes it difficult to comment on policy proposals. Guidance is crucial to the effective and consistent implementation of the proposed changes"

The consultation responses document lacks any indication of how and when the proposed revisions to PPS6 will be advanced or if the call for practice guidance to be published for consultation alongside draft PPPS will be heeded. Enquiries made of the Department for Communities and Local Government today however indicate that the final version of PPS6 will be published later in the spring of this year and will be accompanied, at the same time, by the promised practice guidance. There will be no further public consultation of either document.