A CRACKDOWN on “Tesco towns” is set to be unveiled this week by the Competition Commission when it releases the provisional findings of its 18-month inquiry into the UK grocery market.

The regulator is expected to recommend a shake-up of planning law to stop any of the big four supermarket chains seizing a dominant position in a local market.

It will argue that competition could be encouraged by the introduction of a “fascia” or competition test – a guideline to local authorities encouraging preferential treatment for planning applications from retailers that do not have a presence in the area.

The watchdog is also expected to recommend controversial modifications to the government’s “town centre first” planning policy that aims to protect town and city centres from competition from out-of-town super-stores. While it will recognise the political need for planning restraints, it is expected to say that the town centre first policy and the so-called “needs” test can act as barriers to competitors entering local markets.

The moves could help to break the “Tesco town” phenomenon, so-called after Tesco’s dominance of places such as Bicester, Oxfordshire, and Inverness in the Scottish Highlands. The watchdog is likely to stress that it is not specifically targeting Tesco and that its main rivals also have big concentrations of stores in some areas that are a cause for concern.

In revealing its provisional findings on Wednesday, the commission is expected to say that supermarkets have broadly done a good job for the consumer. Food prices are down 7% in real terms since 2000, and the overall picture is one of tough competition, the commission will say.

But it will also highlight concerns in local markets – and in doing so, deal a blow to Tesco, which had argued that the grocery market should be judged nationally, rather than town by town.

In a detailed examination of competition in and around large stores, investigators found that just over a third of all stores have no more than two rivals within a 10-minute drive.

Nearly 100 big stores have no competitors at all within a 10-minute drive.

There is expected to be a warning note sounded on supermarkets’ land holdings, which critics have said might be used to block competition.

The findings are likely to anger Tesco, which has urged the commission to take a wider view of the market. Sir Terry Leahy, Tesco’s chief executive, recently told The Sunday Times that he felt the inquiry had become more about his company’s position than the working of the grocery market.

Tesco and its rivals have consistently denied any wrongdoing or that they use their landholdings to stifle the growth of competitors.

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