DAC Beachcroft Real Estate Advisory: Tip of the week - Rules of the Competition - DAC Beachcroft

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DAC Beachcroft Real Estate Advisory: Tip of the week - Rules of the Competition

Published On: 27 May 2014

Since April 2011 the Competition Act 1998's anti-competitive provisions have applied to previously excluded land agreements, such as leases and agreements for lease. 

Until the very recent County Court decision in Martin Retail v Crawley BC (2014), there had been no reported case on the application of the regime to land agreements and the Martin decision is therefore of great interest.

The Judge had to consider whether a proposed user clause in a lease renewal expressly prohibiting the sale of alcohol, groceries, convenience goods and other uses within Class A1 was anti-competitive. The landlord justified the clause by relying upon its letting scheme for the parade of shops of which the tenant's unit formed part.

The Judge ruled that the clause was anti-competitive because it provided a means of eliminating competition in convenience goods on the parade and within a relatively short walking distance. The Judge added that, had the relevant market been geographically bigger so as to include other convenience stores, there would have been no possibility of elimination of competition. 

Two points should be noted: 

  • Anti-competitive provisions in leases can be challenged by tenants. Landlords should consider the extent to which it is likely that such provisions could be anti-competitive and whether the statutory exemptions might save the clause;
  • A key factor will always be the extent of the relevant market and the existing and potential competition in respect of the particular products in that market. Independent expert evidence will play a key role in addressing and clarifying these aspects.
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