Supermarkets round on Aldi and Lidl over ‘rigged’ system
A host of leading British supermarkets have rounded on German discounters Aldi and Lidl over fears competition is being “distorted” by a “rigged” system.
Sainsbury’s, Morrisons and Iceland are ramping up pressure on the competition watchdog to crack down on Aldi and Lidl’s ability to block rivals from opening new stores on nearby land.
The German discount supermarkets have been in bitter competition with UK grocers since their arrival at the turn of the century, as establishment names like Sainsbury’s and Tesco have sought to pinch their shoppers through ruthless price-match deals.
Sainsbury’s, the UK’s second-largest supermarket, is hoping to land a blow against its German competitors as it petitions the Competition and Markets Authority (CMA) to change its rules on restrictive property clauses.
Aldi, Lidl benefit from ‘regulatory gap’
The grocer wrote to the CMA, The Times reported, claiming there was a “serious risk” that competition was being made “less effective” by these rules around property.
Because the German supermarkets are classed as “limited assortment discounters” rather than “large grocery retailers,” they can prevent large rivals from opening nearby stores.
Tesco, Morrison, Asda and Waitrose, meanwhile, cannot prevent other large supermarkets from setting up shop nearby, because they are classed as large grocery retailers.
This “regulatory gap” could enable Aldi and Lidl – who are currently the UK’s fourth and sixth largest supermarkets – to grow their market share at a faster rate than their competitors, Sainsbury’s warned.
The supermarket said: “Competition is currently being distorted by the asymmetric ability of Aldi and Lidl to restrict entry and expansion by competitor grocery retailers in local markets, while equivalent restrictions apply to other retailers of comparable or smaller scale.”
‘Level playing field’ needed
Richard Walker, the boss of budget supermarket Iceland, warned last year that the current rules around land expansion are “rigged” in favour of Aldi and Lidl.
Morissons argues the rules should be tweaked to ensure a “level playing field” because the German supermarkets can “no longer notably be described as being ‘at a low price’” because other grocers like Tesco and Sainsbury’s have matched them in recent years.
But Aldi insisted it is smaller than its competitors, telling the CMA: “We do not operate ecommerce, click and collect or home delivery services, butchery or fishmonger counters, delicatessens, pharmacies, opticians, cafés or 24-hour stores.”
“We do not sell tobacco products or newspapers. Our stores are significantly smaller, with a standard net sales area of approximately 1,230 square metres.”
Lidl and Aldi have already faced significant planning delays as they aim to expand aggressively, and a ruling against them could prove a further setback.
The regulator will announce a provisional decision on the dispute in July.