Morrisons, Sainsbury's, and Iceland are demanding a change in property rules that currently allow Aldi and Lidl to block competitors from opening stores nearby. The three supermarket chains have urged regulators to close an expansion loophole that exempts the budget retailers from restrictions faced by traditional supermarkets.
Competition Concerns
The Groceries Market Investigation Controlled Land Order prohibits large grocery retailers from using restrictive covenants to prevent rival stores from opening. However, Aldi and Lidl are exempt because they are not classified as large grocery retailers, despite their significant market share. The Competition and Markets Authority (CMA) will publish its provisional decisions next month, with a final decision expected in September.
Sainsbury's warned that competition is distorted by the asymmetric ability of Aldi and Lidl to restrict entry and expansion by competitors, while equivalent restrictions apply to other retailers of comparable or smaller scale. Morrisons argued that there is clear price competition between large retailers and the discounters, noting that many supermarkets have introduced price match schemes to compete.
Industry Reactions
Aldi defended its position, stating that its business model remains consistent with the Limited Assortment Discounter definition based on range and price, not market share. The company noted that large grocery retailers carry 20,000 to 30,000 SKUs, compared to Aldi's core range of around 2,000. Lidl similarly benefits from the exemption.
Iceland backed the call for change, arguing it is necessary to ensure fairness and a level playing field across the UK grocery market. The CMA's review is ongoing, and the outcome could reshape competition in the sector.
