Tesco has been accused today of reducing competition and choice by the Competition Commission (CC) through its acquisition of a former Co-op owned site in Slough, which the supermarket giant was ordered to stop developing over a month ago.

In a detailed report listing its provisional findings, the Competition Commission says the purchase of the site in 2003, in close proximity to an existing 100,000 sq ft Tesco store, "has resulted in a substantial lessening of competition in the market for grocery retailing in Slough".

The Commission said it is "now consulting on potential measures in relation to the former Co-op site to address the loss in competition".

Tesco bought the Co-op store four years ago as a temporary space to trade from until a redevelopment of an existing site had been completed. After making the transition, Tesco was ordered to sell the site by the Office of Fair Trading (OFT).

The supermarket giant claimed that it had identified a number of potential buyers over the years, including its main rivals.

However, most were "prevented from buying by the OFT on competition grounds", it said. Tesco demolished the building on the site and began developing a food store and three other retail spaces.

In August, the Competition Commission made an unprecedented intervention and ordered Tesco to stop building on the site.

The Commission admitted in its report that this was "an unusual reference", given the three and a half year gap between Tesco completing the acquisition of the Co-op store and a wider Competition Commission inquiry into the British supermarket industry.

The Commission conceded today there was a link berween the two probes.

It said: "While the timelines and ambit of the CC's groceries market investigation and this merger inquiry are different, there is some overlap in these issues.

"In particular, the CC's considerations of the relevant product and geographical markets for grocery retailing in the market investigation provides a framework for our consideration of the relevant market in this inquiry."

In April, Tesco questioned how the Commission defined a "market", stating that it should cover a drive-time radius of 30 minutes or more.

The Commission had previously defined a market as covering a drive-time radius of between 10 and 20 minutes in its last inquiry into the supermarket industry in 2000.

Excluding the former Co-op site, Tesco operates five stores in Slough.

Tesco said today that it had kept authorities "informed at every stage" of the site development, adding: "We will work with the Commission to do so in a way that they find acceptable and that will achieve our shared goal of selling the site as quickly as possible."

The report also detail's Tesco's concerns about a rival buying the Co-op store and the potential impact that could have had on sales at its large Brunel Way site.

It states: "Concerns about the financial impact of a competitor acquiring the [Co-op] store may thus also have motivated Tesco's own acquisition of the CGL store."

Today's announcement is Tesco's second brush with British competition authorities in as many days after the OFT yesterday accused the group, along with four of its rivals, of colluding to inflate the price of milk, butter and cheese during 2002 and 2003.

Tesco strongly denies the claims.

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