Introduction
The Competition Commission's findings are not normally of great interest to property developers but the Commission's provisional findings on its investigation into supermarkets could herald a major shift in the planning prospects for the development of supermarkets, as well as resulting in supermarket retailers being forced to release their surplus land banks.
Findings
The Commission provisionally concluded that, while the UK groceries market is delivering a good deal for consumers, action is needed to improve competition in a number of local markets. It then outlined a number of possible remedies of which the following will be of particular interest to developers, landowners and retailers:
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Taking measures to encourage local authorities to look more favourably on planning applications for edge of town supermarkets;
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Requiring supermarkets to divest themselves of property holdings in areas where there are too few supermarkets;
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Preventing supermarkets using restrictive covenants or exclusivity arrangements to reduce the likelihood of land being used for a competing supermarket; and
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Introducing a competition test that would allow the existing position of a grocery retailer to be taken into account in planning decisions
What will happen next?
The precise nature of these remedies and how they are to be effected are yet to be determined but their potential implications are enormous. Previously mothballed development opportunities may be given a new lease of life and land which has to all intents and purposes being out of circulation may return to the market.
The supermarket retailers are unlikely to accept the Commission's finding without a fight and there are also a number of tactical manoeuvres which could be adopted to blunt the effect of certain of the proposed remedies. It seems clear however that the whole arena of supermarket development is about to be given a shake up and astute developers, landowners and retailers may be able to position themselves to benefit.
One possible result is that supermarkets will look to sell off or develop surplus land before the Commission's findings are formalised. This would provide them with a measure of control as to how and to whom the land is sold which may be lost once the Commission's final determination is announced.
Although changes to planning law to give effect to the Commission's findings will take some time to enact, any landowner / developer pursuing an existing planning application for an edge of town supermarket can only benefit from referring to the Commission's findings if there is a dearth of competition between the different supermarket chains in its locality.
It is also likely that the outcomes of this Report will taken account of in emerging national planning planning policy for town centres and retailing.
Further Information
Further details of the possible remedies put forward by the Commission and of the analysis which informed its conclusion can be found on the Commission's website (http://www.competition-commission.org.uk/).
For further information and to discuss how your organisation can benefit from the Commission's report please contact James Blair, Alastair McKie or Gavin Thain.
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