Battle hots up over 'Tesco towns'

Tesco is gearing up for a new battle against the Competition Commission as it tries to stop the growth of “Tesco towns”, where one supermarket dominates a local market.

The retail giant won a victory against the commission in March when the Competition Appeals Tribunal found that proposals to prevent local dominance had not been thought through. But the commission has redoubled its efforts, saying that the present needs-based test would not uphold consumer interests.

Peter Freeman, chairman of the commission, told the Times newspaper: “The test is likely to have a positive effect for consumers by ensuring that they benefit from greater competition and choice between retailers in their local areas.”

But Tesco director of corporate affairs Lucy Neville-Rolfe called the competition test “burdensome” and said it would cost jobs.

She continued: “The main effect of the proposed test will be to deter extensions, which will prevent many older stores being updated to provide a better offer for customers.”

The retailer argues that the test is flawed because it wrongly assumes that another supermarket would want to fill the void left by any application for expansion blocked by the new laws.

The commission will meet with big retailers over the coming weeks before making a final decision on 5 October, after which the government will have 90 days to respond.