Developer Lend Lease has been removed from a £190m regeneration project in Eastbourne amid fears its appointment could fall foul of competition law

Lend Lease Retail had been working on designs for the scheme for several years, in partnership with Eastbourne council. It became involved in the project owing to a continuing relationship with the council. The Performance Retail Partnership, an investment fund in which Lend Lease is a stakeholder, owns the Arndale shopping centre in the area.

However, the council terminated exclusive negotiations over appointing Lend Lease as development partner last week and put the project out to tender, amid fears that recent EU case law would deem the developer’s appointment anti-competitive, as other bids had not been sought.

Lend Lease could now ask for repayment of the costs it incurred on the scheme, which are believed to run into thousands of pounds.

Rupert Choat, a partner in CMS Cameron McKenna, said: “Public procurement rules have changed recently, and in any situation like this issues can arise relating to the costs incurred by both parties getting to this stage.”

Lend Lease intended to submit a detailed application early next year, with the scheme scheduled to be completed by 2013.

The council said the process of inviting tenders would delay the scheme by four to six months.

A Lend Lease spokesperson said: “We’re disappointed by this decision, given the effort undertaken by the Performance Retail Partnership in supporting the regeneration of Eastbourne town centre to date.”