The Co-op has admitted to more than 100 breaches of a rule that prevents supermarkets blocking rivals from opening competing shops nearby.
The UK competition watchdog said the substantial number of breaches by the mutual, which has nearly 2,400 stores, represented “a significant failure of compliance for a business of Co-op’s size”.
The Co-op, which markets itself as an ethical business, has rewritten 104 of the rogue agreements, which placed restrictions on land use, and agreed to resolve a further four, according to the Competition and Markets Authority (CMA).
The CMA introduced a rule in 2010 that banned the use of restrictive clauses prohibiting a piece of land or a building from being used for a supermarket to block rivals opening nearby stores, hindering competition.
The law was brought in amid concerns about supermarkets amassing “land banks” of unused property to prevent competitors building stores near their outlets.
It was also once commonplace in the grocery industry to place restrictions on the activity of those taking on a lease or buying the land to control competition.
Some also employed lengthy exclusivity agreements to prevent, for example, a convenience store from opening in the same block. Such actions were outlawed under the 2010 rules.
Daniel Turnbull, the senior director of markets at the CMA, said: “Restrictive agreements by our leading retailers affect competition between supermarkets and impact shoppers trying to get the best deals. We know that Co-op has made a considerable effort to amend all their unlawful agreements, given this order has been in place since 2010. Co-op and the other designated retailers must make sure they do the right thing by their customers in the future.”
A spokesperson for the Co-op, which is understood to be reviewing how the breaches occurred, 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 2% 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.”
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The CMA said the action against the Co-op was part of a wider effort to enforce the 2010 rule.
The Co-op, which has a large estate of small outlets, was found to have the longest list of sites with incorrect restrictions in a series of breaches found by the watchdog.
The CMA has previously taken action on similar breaches of the same rules beginning with Tesco in 2020 (23 breaches), after an investigation by the Guardian. The CMA has also taken action against Waitrose in 2022 (7 breaches); Sainsbury’s (18); Asda (14) in 2023; Morrisons (55); and Marks & Spencer (10) in 2023.
