New supermarket war as three big names call out Aldi and Lidl loophole

Supermarkets used to competing on price are now in a dispute over an expansion loophole.

Three of the country's biggest supermarkets have urged regulators to change property rules that allow Aldi and Lidl to block competitors from opening stores nearby.

The traditional supermarkets are banned from doing this - and now Morrisons, Sainsbury's and Iceland have urged the Competition and Markets Authority to act.

What is the row about?

The rules set out in the Groceries Market Investigation Controlled Land Order stop large grocery retailers from using restrictive property clauses that prevent competing chains from opening stores on nearby land.

Aldi and Lidl have not been designated as large grocery retailers under the order, so they do not have to abide by the rules.

Their more traditional rivals claim this is affecting competition in the supermarket space, given Aldi and Lidl's rapid expansion in recent years.

The CMA is assessing whether their designation should change.

What have the traditional supermarkets said?

In a written submission responding to the assessment, Sainsbury's said there was a "serious risk" that competition was "less effective than it could be".

"This lack of a level playing field is meaningful as it inhibits Sainsbury's ability to compete as intensively as it could and limits the competitive constraint on Aldi/Lidl," it added.

It warned the impact of this "regulatory gap" could become more significant as the discounters grow their share of the UK grocery market.

Iceland also backed a change to the rules, arguing a rule change was "necessary to ensure fairness, equality of treatment and a level playing field to facilitate robust competition across the UK grocery market".

Morrisons agreed, saying the discounters' low prices were no longer unique given the increase in price-matching schemes.

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What do Aldi and Lidl argue?

Aldi has pushed for its classification to remain the same.

It insists its lower prices are only possible because it is a limited product range and a simple operating model.

In its own submission to the CMA, it pointed out it did not operate a website where shoppers can buy products or offer click-and-collect or home delivery services, butchery or fishmonger counters, delicatessens, pharmacies, opticians, cafes or 24-hour stores.

Lidl has not filed a public submission to the review.

A provisional decision from the CMA will come in July, with retailers given a chance to respond before its final decision in September.

(c) Sky News 2026: New supermarket war as three big names call out Aldi and Lidl loophole