Aldi and Lidl Face Criticism Over Restrictive Land Practices in Retail Expansion

Supermarket competition in the United Kingdom is under scrutiny as senior retail executives voice concerns about alleged anti-competitive practices by German discount chains Aldi and Lidl. Executives from established grocery chains argue that current market regulations favour these discounters, allowing them to deploy property strategies that disadvantage rivals.

Richard Walker, executive chairman of Iceland, has become the most recent industry leader to challenge the regulatory status quo. He claims that the Competition and Markets Authority is slow to enforce store-opening rules with Aldi and Lidl, giving them an unfair advantage relative to the traditional supermarket giants. Since 2010, regulations have prohibited major grocers such as Tesco, Sainsbury’s, Morrisons, Asda, Waitrose, Marks & Spencer and the Co-op from inserting clauses in property contracts that would prevent competitors from opening nearby. At the time, Aldi and Lidl held a combined market share of less than six percent and so were not included.

Now, Walker says the landscape has changed. Aldi and Lidl now capture close to one fifth of the UK grocery market; Aldi is the country’s fourth largest supermarket and Lidl is set to open its thousandth store. Despite their growth, both chains remain exempt from the restrictive land clauses that apply to their larger counterparts. As a result, Walker alleges that the discounters insert provisions in their property contracts to restrict competitors, impeding the expansion plans of other grocers like Iceland.

Retailers contend this practice places outdated constraints on the industry’s competitive landscape. They warn it is hampering retail development and does not align with the government’s objectives for economic growth and fair competition. Despite acknowledging these concerns, the regulator has yet to implement new rules. Supermarket sources indicate the Competition and Markets Authority has repeatedly delayed its review of the policy, with no concrete date set for a resolution.

A spokesman for the Competition and Markets Authority maintains that the regulator is taking the concerns seriously and that any changes to policy must be made within the legal framework, emphasising a commitment to fairness across the sector. Industry insiders, however, remain sceptical and argue that the lack of decisive action is stifling investment in retail and hindering consumer choice.

With calls for reform growing louder, the regulator’s eventual decision could shape the future of grocery retailing and influence how property competition is managed in the sector.