UK grocery landlord obligations under CMA controlled land orders are easy to miss in a standard lease negotiation. The main duties sit on designated large grocery retailers, not on every commercial landlord. Even so, the landlord is often the other party to the bargain, the owner of the burdened land, or the person whose rent, tenant mix, and funding depend on a clause that may not be enforceable.
A supermarket anchor, a convenience store in a parade, or a parcel next to an existing grocer can all be affected. The issue is not only whether planning permission allows grocery use. It is whether a restrictive covenant or an exclusivity arrangement is controlled by the competition remedy that followed the groceries market investigation. Getting that wrong can leave a landlord with a promise it cannot keep, a covenant it cannot enforce, or an investment priced on a restriction that no longer holds.
This guide explains the regime in practical terms for owners, developers, and their advisers. It is general information, not legal advice. The order has defined tests, and those tests have to be applied to the site, the retailer, and the wording actually used.
Why land control still matters in grocery property
Grocery property is often underwritten on control of the surrounding trade. A landlord may want the anchor to be the only food retailer on a park. A seller may market nearby land as incapable of grocery use because an old covenant says so. A lender may treat that restriction as part of the security.
Competition authorities took a different view of some of those controls. Long-lasting land agreements can make it harder for another grocer to open, even where there is demand and a suitable site. The remedy was a controlled land order: a set of rules that limit how designated retailers use restrictive covenants and exclusivity arrangements.
For a landlord, the commercial point is simple. A clause can look valuable in heads of terms and still be a poor foundation for a deal. If the retailer cannot lawfully give or enforce the restriction, the landlord should not price, fund, or design the scheme as though the restriction were solid.
What the controlled land order is
The Groceries Market Investigation (Controlled Land) Order 2010 was made by the Competition Commission after its investigation into the supply of groceries in the UK. The Competition and Markets Authority is the successor body and is responsible for monitoring and enforcing the order. The legal framework for market investigation orders sits in the Enterprise Act 2002.
The order is aimed at land agreements that may restrict grocery retailing. Two tools matter most:
- A restrictive covenant is a property promise that burdens land. In this setting, it often stops that land being used for a supermarket, a convenience store, or another form of grocery retail, for the benefit of a nearby store.
- An exclusivity arrangement is usually a contractual promise, often in a lease, agreement for lease, or side letter. The landlord agrees not to permit competing grocery use on other land it controls, such as the rest of a shopping centre or retail park.
The order does not replace planning law, the Landlord and Tenant Act 1954, or ordinary title restrictions between private parties who are outside its scope. A planning condition, a user clause, and a competition restriction can all affect the same unit, and they do not do the same job.
It is also separate from the Groceries Supply Code of Practice. That code concerns how designated retailers deal with suppliers. Compliance with the supply code does not tell a landlord whether a land clause is permitted.
Who the order binds, and why landlords still carry risk
The order is addressed to large grocery retailers designated under it. The original designations reflected the largest supermarket groups at the time of the investigation. They did not include every food retailer, and they did not include Aldi or Lidl when the order was made. Designation is not a commercial label a landlord can assume from store size or brand recognition alone. It has to be checked against the order and any later CMA notice.
That structure can create a false sense of safety. Landlords sometimes assume that, because they are not the named business, the draft can say whatever the parties want. The practical risk does not work that way.
If the tenant is a designated retailer, it may be prohibited from entering into the clause the landlord wants. It may also be prohibited from enforcing an older covenant or exclusivity arrangement. The landlord then has a document that the other party cannot stand behind. If the landlord later tries to rely on it, the dispute is not only a property dispute. It can become a compliance problem for the retailer and a transaction problem for the owner.
The same caution applies when the market has moved on. A fascia that was outside the original list may be relevant to a later decision, a variation, or a different set of facts. Where a deal involves a discounter, or a covenant connected with one, read the current CMA material rather than relying on the 2010 designation list alone. The CMA Controlled Land Order Aldi Lidl 2026 restrictive covenants ruling is a separate discussion of that later landscape. This article does not treat that ruling as a substitute for the CMA notice, and it does not assume that every discounter is in the same position as a designated large grocery retailer.
Landlords should also remember the other side of the test. A restriction in favour of a retailer that is outside the order is not automatically void. Nor is every restriction granted by a designated retailer automatically forbidden. The wording, the land, the duration, and the local market all matter.
Restrictive covenants landlords should not take at face value
A restrictive covenant can sit quietly on a title for years. It may have been given when a supermarket site was sold, or when a developer wanted an anchor and was willing to sterilise nearby land. On a later sale, the covenant is easy to describe as a benefit. It is harder to prove that it can still be used.
Under the controlled land order, a designated large grocery retailer is restricted in entering into a restrictive covenant that may restrict grocery retailing. Existing covenants are not a free pass. The order also limits enforcement and, in defined cases, requires release. Whether a particular covenant is caught depends on the order’s tests, including who has the benefit and whether the covenant may restrict grocery retailing. A covenant that only limits a non-grocery use, or that benefits someone outside the order, may sit in a different category. That is a document-specific question, not a slogan.
What to check on title
Before marketing land as “no grocery use”, or before buying on that basis, a landlord or purchaser should ask:
- Who has the benefit of the covenant, and is that person a designated large grocery retailer?
- Does the covenant restrict grocery retailing, or only some other use?
- Has it already been released, varied, or declared unenforceable?
- Is the burden registered, and do the official copies match the deed the parties are relying on?
- Will a lender, buyer, or superior landlord require a formal release rather than a comfort letter?
A release is a property transaction in its own right. It may need a deed, lender consent, consent from a superior landlord, and an application to HM Land Registry. If the covenant is one the retailer must not enforce, waiting until a buyer raises the point usually costs more than dealing with it in due diligence.
An example from a disposal
Suppose an owner wants to sell a small site beside a supermarket. The title contains a covenant against grocery use, given for the supermarket’s benefit. The owner’s agent describes the site as protected from a rival convenience store. A buyer prices the site on that basis, then finds that the beneficiary cannot enforce the covenant and may already have been required to release it.
The planning position may still limit what can be built. Private covenants in favour of other neighbours may still bind. But the supermarket covenant itself may not be the shield the price assumed. The honest sales pack says what has been checked and what has not.
Exclusivity arrangements in leases and development documents
Exclusivity is the issue that appears most often in new grocery deals. A landlord agrees that no other unit in the scheme will be let for grocery, supermarket, convenience, or sometimes much wider food use. The promise may be in the lease, in an agreement for lease, in a side letter, or in a set of letting criteria the landlord is obliged to follow.
The label does not decide the outcome. A clause can be an exclusivity arrangement if, in substance, it may restrict grocery retailing. A very wide “food and beverage” ban, a promise not to let to a named list of grocers, or a restriction on floor area for any food retail can all raise the same question. So can a positive obligation to enforce user clauses against other tenants.
The order limits both new arrangements and the enforcement of existing ones, subject to exceptions. Those exceptions are technical. A limited duration is a recognised part of the regime. Five years from store opening is a widely cited feature of the permitted-duration test. It is not a blanket permission to promise five years of exclusivity in every scheme, and it is not a reason to ignore longer clauses that the parties hope will never be challenged. Store characteristics and local market concentration can change the analysis. In a highly concentrated local market, the order’s protection of competition is stricter. “Highly concentrated” is a defined test based on competing grocery fascia and store size. It is not the same as a landlord’s view that the park already has enough food shops.
Drafting habits that cause problems
Several ordinary drafting habits clash with the order:
- Rolling a 10- or 15-year exclusivity clause forward from an old precedent.
- Defining the restricted use more widely than grocery retailing, then assuming the extra width makes the clause safer.
- Hiding the promise in a side letter while the lease stays silent.
- Agreeing that exclusivity will be “extended automatically” if the tenant renews.
- On a 1954 Act renewal, copying the old exclusivity into the new lease without checking whether it is still permitted.
None of these devices changes the substance of the promise. If the retailer cannot enter into it, the landlord should renegotiate the heads of terms. Common commercial substitutes include a shorter, carefully scoped exclusivity that has been tested against the order, a rent structure that does not depend on exclusivity, or a tenant-mix policy the landlord is free to change. Which substitute is lawful depends on the facts. Inventing a workaround that has the same effect as a prohibited clause is not a solution.
An example from a retail park
A developer is granting an agreement for lease to a designated large grocery retailer. The retailer asks for exclusivity over the whole park for the full term, including extensions, and wants bakeries, frozen-food shops, and any unit over a modest floor area caught by the ban. The developer’s appraisal assumes that promise because the anchor’s rent is higher with it.
The safer sequence is to pause before exchange. Ask whether the tenant is designated. Ask which exception, if any, is said to permit the clause. Limit the promise to what the order allows, or remove it and reprice the deal. Completing in the hope that nobody will enforce the order leaves the developer with an anchor covenant it may not be able to use when a second food retailer makes an offer for another unit.
A practical process before you grant, buy, or enforce
UK grocery landlord obligations under CMA controlled land orders are mostly process obligations in practice: check, record, and do not build the deal on a restriction you have not tested. A workable sequence is set out below.
Before heads of terms
Identify the proposed tenant and any guarantor. Confirm whether the tenant is a designated large grocery retailer, using the order and current CMA publications rather than brand lists in a precedent. Describe the land the restriction would cover, with a plan. State the duration. State whether the landlord is relying on a concentrated-market exception or a duration exception. If nobody can answer those points, the exclusivity headline in the heads of terms is premature.
During drafting
Keep grocery restrictions in the document where they can be reviewed, not in an informal email. Define grocery retailing by reference to the deal, but do not assume a narrow shop name avoids the order if the effect is to keep other grocers out. Ask the tenant to explain, in terms its compliance team will stand behind, why the clause is permitted. Then have property and competition advice read that explanation against the draft. A tenant’s commercial wish to be the only grocer is not the same as a legal right to that position.
On a purchase or refinance
Treat controlled-land risk as a title and income issue. The buyer’s solicitor should look for covenants benefiting a grocery site, exclusivity in occupational leases, and side letters that never made it into the lease abstract. The valuer should be told if a restriction cannot be relied on. A lender should see the same point, because a fall in control can be a fall in the story used to support rent and value.
If a release is needed, agree who pays, who prepares the deed, and what happens if the beneficiary delays. Do not leave release as a condition that can be waived without the funder agreeing.
If you want to enforce
Enforcement is where landlords most often discover the problem too late. A landlord asked to sue another tenant for a grocery use, or asked to refuse consent to a change of use, should stop if the only basis is a covenant or exclusivity arrangement caught by the order. Enforcing a prohibited restriction can put the designated retailer in breach. It can also expose the landlord to a claim from the tenant it is trying to restrain, if the landlord had no lawful ground to refuse.
The CMA can take enforcement action for breach of an order made under the Enterprise Act 2002. This article does not set out penalties or predict the outcome of any case. The practical lesson is narrower: do not treat non-compliance as a private risk that only matters if a competitor complains.
What landlords are not required to do
The order does not create a general registration scheme for commercial landlords. It does not ban every exclusivity clause in UK retail property. It does not force a landlord to accept a grocery tenant, and it does not cancel planning control. Restrictions that fall outside the order can remain important. The task is to separate those restrictions from the ones the order controls.
How the order changes appraisals, tenant mix, and management
Once a restriction is uncertain, several numbers move with it.
Rent is the obvious one. An anchor may pay more for control of food retail on a park. If that control cannot be promised for the term the tenant wants, the rent, the incentive, or the specification may need to change before the deal is circulated to investors.
Tenant mix is the next. A landlord that cannot offer lawful exclusivity needs a plan for a second food retailer, a smaller convenience use, or a clear refusal that rests on planning or on covenants outside the order. Estate regulations and the marketing brochure should match that plan. It is unhelpful to tell incoming retailers that the park is “supermarket protected” if the protection is a clause the anchor cannot enforce.
Development programmes are affected too. A phase-two unit aimed at a discounter is a different project if an old covenant has to be released first, or if the phase-one lease already promised that the unit would never be used for grocery retail. The release, the variation, and the planning application should be programmed together.
Management teams should also brief the people who grant licences and consents. A concession for a food hall, a click-and-collect pod, or a temporary grocer can raise the same issue as a permanent letting if an exclusivity arrangement is in force and is still enforceable. Conversely, staff should not refuse a concession solely because an old letter says “no other food”, if that letter is a prohibited arrangement.
Keep a short compliance file for each grocery letting: the designation check, the plan, the duration, any market-test advice, and the final clause. If the CMA, a buyer, or a court later asks why the clause was used, reconstruction from an archive of drafts is a weak answer.
Using the order without overstating it
Landlords sometimes swing from ignoring the order to treating it as a ban on all grocery competition clauses. Neither approach is sound.
Use the order as a filter. First, is a designated large grocery retailer the party that would enter into or enforce the restriction? Second, may the restriction restrict grocery retailing? Third, does a specific exception apply, on the order’s own terms, to this store, this land, and this period? Fourth, what property steps follow: release, variation, Land Registry application, lender consent, or a reprice?
If the answer to the first question is no, say so clearly and keep reviewing the point if designation or the transaction structure changes. If the answer is yes and no exception applies, take the restriction out. If an exception might apply, record why, and do not widen the clause beyond that reason.
Later rulings and designations can change the names in that filter. They do not remove the need to read the clause. A decision about one retailer’s covenants is not a template for every landlord in the sector.
Conclusion
UK grocery landlord obligations under CMA controlled land orders are indirect, but they are real. The order binds designated large grocery retailers. Landlords feel it because they draft the exclusivity, hold the burdened title, enforce the covenant, and underwrite the rent.
Check designation before you promise control. Treat restrictive covenants as items to test, not as permanent shields. Treat exclusivity as a defined competition restriction, not as a standard retail-park extra. Use the order’s exceptions only where their conditions are met, and do not treat a five-year period as a universal safe harbour. Separate this regime from planning and from the groceries supply code.
Where the retailer, the covenant, or a later CMA decision sits outside the original list of large grocery retailers, read that decision in full and take advice on the site in front of you. The cost of a careful check before exchange is usually lower than the cost of a restriction that fails when a second grocer arrives.
EXTERNAL SOURCES:
- Competition and Markets Authority — the UK authority that monitors and enforces market investigation orders, including the groceries controlled land regime.
- Enterprise Act 2002 — the statute that provides the market investigation and enforcement-order framework under which the controlled land order was made.
- Groceries Code Adjudicator — the office that oversees the Groceries Supply Code of Practice, which is a separate regime from controlled land obligations.
- HM Land Registry — the registry through which restrictive covenants and deeds of release are typically recorded on registered titles.
FAQs:
Do CMA controlled land orders impose duties directly on landlords?
The Groceries Market Investigation (Controlled Land) Order 2010 imposes its prohibitions on designated large grocery retailers. Landlords are not, in general, required to register with the CMA or to run a competition-compliance programme simply because they own shops. They are still exposed. They may be asked to grant exclusivity, to enforce a covenant, or to sell land on the strength of a restriction the retailer cannot lawfully stand behind. The practical obligation is to test the clause before relying on it.
Can a landlord still agree exclusivity with a supermarket tenant?
Sometimes, but not as a standard full-term promise. If the tenant is a designated large grocery retailer, an exclusivity arrangement that may restrict grocery retailing is restricted. Limited exceptions exist, including exceptions linked to duration, the type of store, and whether the local market is highly concentrated. Those exceptions have conditions. A landlord that wants exclusivity should identify the exception first and draft only within it. If no exception applies, the exclusivity should come out of the deal and the rent should be agreed without it.
What should a landlord do with an old covenant against grocery use?
Do not assume it is still enforceable, and do not assume it is dead. Identify who has the benefit, whether that person is a designated large grocery retailer, and whether the covenant may restrict grocery retailing. Then check the order’s rules on enforcement and release, together with the title documents and any later deed of release. If the covenant cannot be used, correct the sales particulars, the valuation, and the management plan. If a formal release is required, deal with lender and superior-landlord consent and with registration, rather than relying on a letter that the restriction will not be enforced.
