Competition Commission test could be delayed until 2010 after Tesco appeal

Tesco's decision to appeal against the grocery inquiry's crucial competition test next week could delay its implementation until 2010 at the earliest.

The UK's biggest grocer, which fears the competition test could put the brakes on its future expansion, sought a judicial review and the case will be heard by the Competition Appeals Tribunal on Tuesday. It will last three days. Marks & Spencer, Asda and Waitrose and the Association of Convenience Stores will also attend the hearing in central London as interveners, supporting the commission.

In the final report of the Competition Commission's two-year inquiry into the grocery sector, it recommended setting up a competition test that aims to prevent one retailer gaining a dominant position with larger stores in a local area to the detriment of consumers.

However, industry sources believe a verdict on the appeal, which Tesco could appeal against, may not be delivered for at least three months, based on the protracted publication of other cases.

The commission had initially hoped that the Government could implement the competition test by early April 2009, but because of Tesco's appeal it will now have to wait until 1 October 2009, which is the potential next date for bringing in such a regulation.

However, several industry sources believe that it is unlikely that the competition test will see the light of day any time before 2010.

Tesco, which has the most to lose from the competition test among the big four grocers, denied the appeal was designed to prolong its implementation. A Tesco spokeswoman said: "This is not a stalling tactic."

A key argument of Tesco's is that the competition test is a disproportionate response to the level of problems they have identified, given that the commission said that overall the grocery sector is highly competitive.

The Department of Communities and Local Government will review the commission's conclusions on the grocery sector as part of its own review of town centre retail planning.

In its final report, the commission found that Tesco had 31 per cent of its larger stores in highly concentrated markets. The figure for Morrisons was 30 per cent, for Asda it was 23 per cent, and for Sainsbury's it was 26 per cent.