The Competition Commission proposals in full

A move to end the proliferation of “Tesco towns” by promoting competition between retailers was today outlined by the Competition Commission (CC).

The Commission recommended a new “competition test” under which authorities would have to take account of how many outlets a supermarket already has in a particular area.

If there are too many Tescos locally, for example, the council could support an application from an Asda instead.

Tesco, which dominates the market, has fiercely opposed such a move.

The plans were part of a package of measures unveiled by the competition watchdog following a two-year inquiry into the £120 billion a year grocery market and the 75 per cent market dominance of the Big Four players - Tesco, Asda, Sainsbury’s and Morrisons.

Other measures included the creation of a new independent ombudsman or ‘shopping czar’ to oversee a code of practice between supermarkets and their suppliers.

The ombudsman will enforce a new strengthened code of practice and arbitrate on disputes.

The farming industry in particular has long complained that suppliers have been losing money because of alleged sharp tactics and unfair practices used by supermarkets to boost their profits.

Supermarkets will also be banned from so-called 'restrictive covenants' under which they prevent land they are selling from being passed on to other supermarkets.

However the Commission stressed that it was not calling for supermarkets to sell off stores or land holdings - a move which some in the industry had expected.

In response, Asda said: "We welcome the Competition Commission's recommendation to introduce a new 'competition test'.

"We support the Government's town centre first policy, and believe if the planning system was changed to allow more competition at a local level, shoppers throughout the UK would benefit through lower prices, more choice and better quality.

"We also broadly welcome the extension of the code of practice to cover the majority of grocery retailers.

"We look forward to understanding in greater detail the role of the ombudsman, who we believe should have consumers at the top of their agenda."

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