A property developer is suing Tesco over alleged breach of competition law that prohibits rival retailers from building their own stores near one of Tesco's supermarkets. The legal papers were submitted last Friday which claim that Tesco violated the agreement by law.
In 1997, Tesco acquired a land for the store from High Peak Developments and insisted that an agreement should be arranged to ensure the surrounding lots could not be bought or be used for the sale of pharmaceutical products, convenience goods, and sale of food. Invezz reported that in July, High Peak entered into a conditional covenant with discount chain B&M Bargains to start a new store on the land. High Peak Developments agreed to pay Tesco for the release of the agreement and back in August, legal papers were exchanged by both parties.
However, Tesco refused to relinquish the agreement, taking 'an anti-competitive' stance, according to Retail Gazette. The property developer filed a lawsuit claiming Tesco has participated in illegal activity by refusing to release a covenant on the surrounding land in Derbyshire. Tesco is now being charged for turning back on its agreement to release the initial competition agreement.
Gareth Burch, a solicitor at Pannone Corporate, who is representing the developer said that their client believes that Tesco grocer committed a breach of competition law. The Telegraph reported that during the 90's, the use of restrictive covenants had been common, but supermarkets were ordered by the Competition Commission to remove certain clauses in 2010. "Grocery retailers are engaging in land banking as a strategy to impede the entry of rival retailers into local markets," says the regulators.
Meanwhile, Tesco spokesman said that negotiations about the site next to Whaley Bridge Superstore are still ongoing. The grocer said that it will continue to negotiate with the parties involved reach a mutually acceptable agreement.
