Tesco successfully challenged the test on the grounds that a cost-benefit analysis had failed to be carried out, and that the test could prevent an established retailer expanding its operations in a particular location to meet customer demand.
Gordon Crump of Spar Compton in Wolverhampton said that the decision didn't surprise him. He said: "This just demonstrates how the big boys always get their own way and the smaller stores are left fighting for survival."
Ken Thomas, who owns Arkwrights in Swindon, Wiltshire, added: "Tesco tends to dominate everything and seems to be able to bully its way into the market. There is room for smaller stores but we need to work together to fight the multiples."
Association of Convenience Stores chief executive James Lowman said the Tribunal's decision exposed flaws in the grocery market Inquiry.
"Having gathered evidence for more than two years, and in spite of having identified real consumer detriment, the Commission has yet to put in place any of the measures that it concluded were necessary for a fairer market," he said.
The Commission said it would study the ruling before deciding on a future course of action.