Competition Commission to investigate BLP and Tesco

Berwin Leighton Paisner (BLP) has potentially landed its largest client, Tesco, in hot water with the Competition Commission.

The Competition Commission, which is already conducting a wide-ranging investigation of the grocery market, is to turn its gaze on contracts drafted by BLP between its client Tesco and the North Norfolk District Council.

A Competition Commission spokesman told The Lawyer: “The accusation is certain supermarkets are playing games with the [planning] system and building up a bank of land with no intention of developing it.

“Law firms act as the interface to these transactions, and competition law is a specialist field with which they have to interface. It is certainly an area we will be looking closely at.”

The firm admitted in a 500-page report prepared by the council’s officers that contracts it had drafted prevented the council from selling land to rival supermarket chains.

North Norfolk councillors called for the inquiry after discovering part of a 2003 deal to develop a Tesco store still prevented them from selling land to Budgens, despite the Tesco development stalling. The case has caused outrage in the local community.

The council decided to take no further action, while BLP referred all questions to Tesco.

A Tesco spokesman said he was “not surprised” the Competition Commission would investigate the deal, but the company would continue to be loyal to the law firm.

“The investigation by the council found no wrongdoing, and there is absolutely no reason why our relationship with BLP would be affected,” the spokesman said.

The three-pronged Competition Commission investigation into the grocery sector is to focus on the alleged policy of “land banking” by major chains; on the supply chain relationship between major retailers and their suppliers; and on retail competition issues such as price flexing and below cost selling.

Tesco has instructed Freshfields Bruckhaus Deringer on its defence of the Competition Commission investigation.

In 2004, BLP settled a claim from Tesco after a dispute about the firm’s handling of a property deal. The matter was handled mainly by both parties’ insurers. The case was settled for a small sum believed to be far less than the £1m claimed by Tesco.