Competition Appeal Tribunal Criticises Parts Of The Competition Commission's Report On The UK Groceries Market

On 4 March 2009, the Competition Appeal Tribunal (CAT) published

its judgment on an appeal by Tesco against the Competition

Commission (CC) findings in its final report on the UK groceries

market. The CAT concluded that the CC had failed to take account of

relevant considerations when recommending the competition test be

incorporated into the planning regime, and will now hear

submissions on appropriate relief.

The CAT's judgment is focused on the narrow issues directly

raised by the Tesco case. The CAT has declined to enunciate general

principles, or to prescribe precisely how the CC should address the

task of formulating remedies in a market investigation case. It has

declined to answer some of the questions of statutory

interpretation raised by Tesco in the formulation of its

case.

But, whilst emphasising the narrow scope of judicial review, and

the wide margin of appreciation available to the CC, the CAT's

judgment is more likely to be remembered for its result –

namely, that the CAT ultimately decided that the CC had not applied

the proportionality test properly.

Background

Tesco's appeal challenged the recommendation in the CC's

report that a "competition test" should be incorporated

into the planning regime as part of a package of remedies to

address the adverse effect on competition the CC had found in its

inquiry. The competition test would generally prevent local

authorities from granting planning permission for the construction

of a new large supermarket, or the extension of an existing

supermarket, where the relevant local market for the supply of

groceries was already highly concentrated in favour of, among

others, the applicant or would become highly concentrated as a

result of the grant of planning consent.

The competition test was designed to prevent additional local

markets becoming highly concentrated. During the course of the CAT

proceedings, it became apparent that the CC also saw the test as

facilitating new market entry, on the basis that, if a large

incumbent operator was unable to secure planning consent to build a

new or extended store, that would enhance the prospects that others

could secure planning consent for a rival store.

In its judgment the CAT concluded that the CC had failed to take

account of certain relevant considerations in deciding to recommend

that the competition test should be adopted, and those matters

could not be dismissed as incapable of affecting that

recommendation. However, the CAT reached no conclusion as to

whether the CC could lawfully have adopted the competition test, if

it had had due regard to these additional relevant

considerations.

The parties will address the CAT as to specific relief to be

granted at a separate hearing. Under the provisions of the relevant

legislation the CAT may...