Watchdog to defy Tesco and bring in test for new store plans

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Last year, the regulator said it wanted to give power to local authorities to block new supermarket development in areas where the company concerned had more than 60% market share, or owned another store within a 10-minute drive.

Tesco appealed against this plan and won some favour with the Competition Appeal Tribunal earlier this year.

The Tribunal told the watchdog to come up with numbers which make the case that its plan would benefit consumers.

In a 50-page document today, the Commission argues that the rule would help smaller retailers.

Peter Freeman, chairman of the watchdog, said: "What we were asked to do by the Tribunal was to prove the case for the competition test and show that it would have the intended effect to help bring in competition where it is lacking and to stop individual retailers consolidating their position in local areas to the detriment of consumers."

The Commission completed its most recent investigation into the grocery industry last April.

It concluded that the market mostly works well, defying campaigners who say that Tesco in particular is anti-competitive.

The supermarkets giant has 30% of the British market while Asda has 17% and Sainsbury's around 16%.

The supermarkets have another chance to respond to the Commission's findings before its final decision in October.