Paris, Oct. 11 - France should scrap rules on authorising new supermarkets that have prevented the development of discount retailers and kept prices artificially high, the country's competition authority said on Thursday.
In a statement, the regulator said rules that require all stores and store extensions over a certain size to be approved by local authorities were anti-competitive.
The rules' discretionary criteria on employment and other factors should be replaced by common urban regulations, it said. It said it also wanted the power to order supermarket chains to sell stores in case of local monopolies.
"The (Competition) Council recommends abandoning the current system that requires an economic authorisation for the opening or extension of retail space: the distortions to competition that it has given rise to are too significant to be allowed to persist," it said.
According to the Council, the current rules have contributed to the fact that the four biggest supermarket groups in France control 66 percent of the market. It said it had also led to regional concentration, with big groups such as Casino and Auchan being strong in certain areas of the country.
"This situation has favoured price rises that are not in the interest of consumers. It has also penalised employment," it added, citing a study that has shown more retail space would boost jobs in the sector.
Under the so-called Royer law of 1973 all supermarkets over 1,000 square metres required approval at local level. Under the Raffarin law of 1996 that threshold was lowered to 300 square metres, with an obligation for a public inquiry for stores over 6,000 square metres.
The laws were designed to protect small, high street retailers, but the Council said they had failed to stop their decline and the laws had hence failed in their primary objective.
It said the laws had also stopped the development of a discount supermarket sector like in neighbouring Germany, citing the example of chains like Lidl, which gave evidence during its inquiry.