Aldi and Lidl face allegations of leveraging outdated property regulations to hinder competitors from establishing new stores.
Sainsbury’s, Morrisons, and Iceland have petitioned the competition authority to broaden the reach of the Controlled Land Order, a regulation that prohibits major grocery retailers from imposing land restrictions to impede rivals from setting up nearby stores. They advocate for Aldi and Lidl to be reclassified as “large grocery retailers” due to their substantial expansion in recent years, rather than being labeled as “limited assortment discounters.”
Initially introduced in 2010, the rules primarily affect prominent supermarket chains like Tesco, Morrisons, Sainsbury’s, and Asda. Aldi and Lidl were excluded at the time due to their smaller size, but other supermarkets argue that their market share has surged from under 3% to approximately 20% presently.
In response, Aldi contends that its classification should remain unchanged, citing its ability to offer consistently lower prices achievable by limiting its product range. Aldi aims to operate around 1,050 stores, with a target of 1,500 outlets in the long term, while Lidl, with over 1,000 sites, plans to expand to 1,100 shops by the end of 2025. The Competition and Markets Authority (CMA) is anticipated to reach an initial decision in July.
Sainsbury’s emphasized in a written submission to the watchdog that there is a distortion in competition due to Aldi and Lidl’s asymmetric capability to restrict entry and expansion by competitor retailers in local markets, contrasting with similar restrictions on other retailers of similar or smaller scale.
Iceland Foods’ Executive Chairman, Richard Walker, echoed similar sentiments, stating that equal rules should apply to market power of the same kind. He stressed the importance of fair competition, choice, and pricing, particularly in areas where household budgets are under strain.
Morrisons underscored the necessity of extending the Controlled Land Order to encompass Aldi and Lidl to ensure a level playing field in the UK Groceries Sector. Aldi highlighted in its submission to the CMA its operational differences, including the absence of ecommerce, click-and-collect services, and other offerings present in larger supermarkets. Lidl has been contacted by the Mirror for a response.