Tesco owns more than half the unbuilt UK supermarket sites

Competition Commission probes dominance by stores giant which would give it 45% of the grocery market
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The Independent Online

Tesco has amassed more than half of the big four supermarkets' land bank, putting it on course for a bruising battle with the Competition Commission.

The Office of Fair Trading (OFT) said last week it was referring the £95bn grocery market to the commission.

Although the focus is on all the leading supermarkets - Tesco, Asda, J Sainsbury and Wm Morrison - analysts have pointed to the emphasis the OFT appeared to put on Tesco, which already accounts for around a quarter of the sector's total selling space.

"There's only one company the jabbing finger could be pointing at," said Jonathan Pritchard, retail analyst at broker Oriel Securities. "Tesco has been the most aggressive when it comes to opening new stores."

An insider at a rival supermarket said: "It really does feel like a one-retailer issue. No one else has Tesco's land bank."

Tesco has around 24 million square feet of selling space and nearly 2,000 stores in the UK. Analysts estimate that represents between 18 per cent and 25 per cent of the total selling space.

But the group has also excelled at building up a land bank of sites for new stores. The OFT highlighted its concerns about the size of the big four's land bank, which could potentially be transformed into 316 stores.

Tesco is believed to have the greatest proportion, with around 58 per cent. That equates to 4.5 million square feet of selling space across a possible 185 sites. Tesco has a market share of around 30 per cent and is nearly twice the size of its closest rivals, Asda and Sainsbury.

Industry insiders believe its market share could soar to 45 per cent should all its land bank be turned into stores.

Tesco last week remained bullish about the probe, with group corporate and legal affairs director Lucy Neville-Rolfe noting: "We are confident that once the other observations in the report are explored the regulators will find that they are misplaced."

A spokesman declined to detail the exact size of Tesco's land bank. But he added: "We don't sit on sites for any other reason than developing them. Sometimes that can take a little bit of time while you acquire neighbouring sites to get an overall development, and sometimes the planning process can take time.

"But all the sites that we have are there for developing and we want to get on and do that as quickly as we can."

Tesco has been accused of squeezing out small retailers, bullying suppliers and contributing to "cloned" high streets. Its portfolio ranges from small convenience shops to mammoth out-of-town stores. Yet customers continue to shop at Tesco, helping profits and sales surge. It also has its defenders.

Richard Hyman, chairman of retail consultancy Verdict, said it was a well-run business that was able to increase its land bank because its rivals were not able to expand as aggressively. "Do you think it's unacceptable to make a profit selling goods to the public?"

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