Tesco has lost a court battle over Sainsbury’s £17m first supermarket in Dumfries, after challenging the council decision that allowed its rival to move into a former Homebase store.

The Court of Session rejected Tesco’s bid for a judicial review of Dumfries and Galloway Council’s decision to relax longstanding restrictions on the Cuckoo Bridge Retail Park site.

The restrictions, dating back more than 25 years, had limited the unit to the sale of bulky non-food goods in an effort to protect Dumfries town centre.

Sainsbury’s applied to have the condition changed after taking over the former Homebase unit, prompting objections from both Tesco and Morrisons.

Tesco subsequently took the decision to court, arguing there was no “lawful or rational basis” for the council to conclude that Sainsbury’s plans complied with the development plan and that the reasons it had given were inadequate.

Lord Sandison rejected the challenge, finding the council had been entitled to approve the plans and that its approach was “well within the bounds of rationality”.

The judge also found there was no conflict between the relevant national and local retail planning policies that would have made the council’s decision unlawful.

The ruling leaves Sainsbury’s free to continue trading from the site, although the legal decision comes more than two months after the supermarket actually opened.

Sainsbury’s launched the 35,000 sq ft store on 23 July following a £17m redevelopment of the former Homebase.

Before the opening, the nearest Sainsbury’s supermarket for many Dumfries shoppers was around 25 miles away in Carlisle.

Tesco already operates a large Extra store a short distance from the new Sainsbury’s at Cuckoo Bridge, while Morrisons also has a supermarket nearby.

Sainsbury’s had argued that the new store would bring greater choice and competition to the town. Planning officers found there was no suitable alternative site in Dumfries town centre and concluded the supermarket would not have a significantly adverse impact on its vitality or viability.

That argument ultimately survived Tesco’s court challenge.

Tesco said it did not object to the “vast majority” of planning applications made by competitors and insisted its challenge had been based on planning considerations rather than the potential loss of trade.

A Sainsbury’s spokesperson said: “This outcome demonstrates the robust approach that Dumfries and Galloway Council took in determining the application.”

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