The Competition and Markets Authority has confirmed that Aldi and Lidl will be subject to the same restrictions on property agreements as other large supermarket groups, extending measures intended to prevent chains from blocking rival stores in local markets.
The decision, announced on 22 October, designates Aldi, Lidl Great Britain and Lidl Northern Ireland as Large Grocery Retailers under the Groceries Market Investigation (Controlled Land) Order 2010. The order already applies to Asda, Co-op, Marks and Spencer, Morrisons, Sainsbury’s, Tesco and Waitrose.
It targets particular property arrangements rather than the supermarkets’ overall ability to acquire or develop land. Restrictive covenants and exclusivity terms can prevent a competing grocery retailer from opening nearby, limiting consumer choice even where another business is willing to invest in a suitable site.
Once designated, the retailers cannot introduce prohibited restrictions into new agreements. Existing agreements may also be reviewed by the CMA at the request of interested landowners, developers or rival supermarkets. The regulator’s decision brings the discounters into a regime that has governed other major chains for more than a decade.
The CMA set out provisional decisions in August before considering representations from the industry. Its final statement records support for the proposal from retailers including Morrisons, Waitrose and Iceland. The regulator says it received no representations from the three businesses it has now designated during the final consultation stage.
The decision reflects changes in the grocery market since the original order. Aldi and Lidl have expanded their store estates and taken market share from established chains, making them significant competitors in local shopping areas. The CMA estimates that the UK food and grocery market is worth £222.7bn and says the two discounters rank among its five largest operators by market share.
For developers and commercial landlords, the rules affect negotiations over site disposal, leases and retail development. An exclusivity term that appears valuable to an incoming anchor tenant may limit future occupiers or create regulatory difficulties. Property teams will need to understand whether an arrangement falls within the order before agreeing restrictions.
Local competition is shaped by more than prices displayed on supermarket shelves. Planning permission, road access, store size, lease terms and suitable sites influence which retailers can enter an area. Preventing a dominant operator from tying up land can expand the options available to competitors, but it does not guarantee that every potential site will secure planning consent or become commercially attractive.
The distinction between Lidl’s British and Northern Irish businesses is also material. The CMA has designated both, while Aldi does not operate stores in Northern Ireland. The decision therefore reflects the legal and operational structures of the businesses concerned rather than treating the UK grocery market as a single undifferentiated estate.
The measure is designed to keep entry routes open for rivals as supermarket groups compete on price, range and convenience. It does not impose direct price controls or require existing stores to alter their product selections.
The order is also relevant when a retailer sells a site it no longer wants to operate. An agreement preventing a purchaser from allowing another grocery store onto the property could affect local competition long after the original retailer has moved out. Reviewing historical contracts may therefore be a practical issue for legal teams and property investors as well as for supermarket chains themselves. The CMA’s ability to examine existing restrictions upon request gives interested businesses a route to raise concerns, although the treatment of each agreement will depend on its actual terms and the order’s legal scope.
The immediate commercial consequence will be seen in property agreements and potential challenges to restrictive terms. Any longer-term change in the number of rival stores opening will depend on development economics as well as the revised competitive conditions.
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