Aldi and Lidl hit with tougher rules in major supermarket crackdown

The Competition and Markets Authority confirmed on Thursday that Aldi, Lidl GB and Lidl NI will be classed as “large grocery retailers” under the Groceries Market Investigation (Controlled Land) Order 2010.

The ruling places them under the same rules that have applied to Asda, Co-op, Marks & Spencer, Morrisons, Sainsbury’s, Tesco and Waitrose for more than 15 years.

These rules stop major supermarkets from using restrictive covenants and exclusivity agreements to block competitors from opening stores in the surrounding area.

Aldi and Lidl were previously exempt because they were classed as “limited assortment discounters” instead of full-scale supermarket operators. Britain’s biggest supermarket chains have backed the watchdog’s decision.

Morrisons, Waitrose and Iceland each wrote to the CMA backing the move.

Budget retailer Iceland, which is not itself covered by the order, told the regulator that the existing rules had allowed Aldi and Lidl to “deploy problematic land arrangements at scale and in a way that could have a material adverse impact on competition for groceries across the UK market”.

Morrisons argued that both discounters “publicly market their product range as being suitable for a full weekly shop” and represent “intense competition” even in product categories where they claim to have a limited offering.

Waitrose warned it had witnessed “first hand” how Lidl had used land agreements to “restrict the ability of other grocery retailers to open new stores and shield Lidl from local competition”. The upmarket grocer urged the CMA to act without delay.

The CMA initially left Aldi and Lidl out of the Controlled Land Order because they held a relatively small share of the grocery market when the rules were introduced.

However, Iceland said both discounters “now each exert a significant and compelling degree of competitive influence in the UK grocery market”.

Iceland and two other rival supermarkets also pointed to Aldi and Lidl’s expansion plans. Both discounters aim to grow their networks to 1,500 stores across the country.

Aldi and Lidl previously argued that they should not be treated as large grocery retailers because they stock fewer products than traditional supermarkets.

However, neither company made formal representations during the CMA’s consultation in August.

Juliette Enser, the CMA’s executive director for competition enforcement and markets, said: “We put in place rules to stop big supermarket chains from blocking rival stores opening in their area, and now those rules apply to Aldi and Lidl.

“This will help level the playing field and make sure shoppers get the best choice of products and prices in their area.”

Both discounters insisted the decision would not hamper their growth plans.

An Aldi spokesperson said: “We remain firmly committed to opening hundreds of new stores across the country, bringing Aldi’s unbeatable value and award-winning quality to even more customers.”

A Lidl spokesperson added: “As a discounter, we have always welcomed and embraced competition within the market, and our focus remains on continuing to open new stores and bringing our high-quality, lowest-priced groceries to even more communities.”

The UK food and grocery market is estimated to be worth £222.7billion, with both Aldi and Lidl now ranking among the country’s five largest retailers by market share.