UK: Competition Law And Land Agreements - Practical Illustrations

Last Updated: 12 September 2011
Article by Jennifer Chappell and Nitej Davda

As we saw in our previous briefing note, a land agreement will fall foul of the Competition Act if it has as its object or effect the restriction of competition, unless it is exempt.

The relevant market

In assessing whether provisions within a land agreement fall foul of the Competition Act the first thing to identify is the market that you are considering. An agreement which restricts the sale of electrical equipment out of premises in Bradford is going to be relevant to the market for electrical equipment in Bradford, but is of no consequence to the market for electrical goods in London or the market for children's clothes in Bradford. So when considering whether a restriction falls foul of the Competition Act you need to identify what the relevant market is and then consider what the effect on that market is.

Some examples

Take a new out of town retail park. The owner is attracted to the site on which it is built because there are no other retail shops within a 20 mile radius and due to planning restrictions there is no realistic possibility of competing retail outlets within the 20 mile radius. The anchor tenant is intended to be a major electrical retailer. In order to attract the anchor tenant the owner of the retail park contracts with the tenant that no other electrical retailer will be granted a tenancy over any part of the retail park for 5 years. The relevant market here would be that for electrical retailers within the catchment area of the retail park.

A variation on the retail park example: Take the owner of two plots of land which are suitable for developing an out of town retail park. There are no other retail shops within a 20 mile radius of the two sites, which are 5 miles apart and benefit from similar amenities. The owner grants a lease of one site to a property developer. In the lease the owner covenants not to use the other site for the development of retail premises. The relevant market in this example is similar to that in the first in terms of geography, but unlike the first example the market is the market for retail premises generally, rather than a particular type of retailer.

Identifying infringement

Having identified the relevant market in each case, does the exclusivity agreement (in the first example) and the restriction on use (in the second) distort competition? The answer in each example is yes, as the beneficiary of the restriction has fettered the ability of a rival to compete.

However, this is not the end of the matter. The restrictive provision is not rendered void solely by virtue of its restrictive effect. All but the most serious restrictive agreements can be allowed if they fall within exemptions contained in the Competition Act, which were considered in the last briefing. The following factors may mitigate against a finding that the restrictions in our examples are void:

  1. The delivery to the relevent market of a large electrical superstore (in the first example) or a retail park (in the second) for a catchment area that previously did not benefit from the same;
  2. The demand for electrical stores / retail parks in the catchment area being satisfied by one store or park rather than multiples of the same;
  3. The increase in competition in other markets (for example supermarkets, clothing stores and DIY stores that amy take space) as a result of the creation of the retail park;
  4. An increase in employment for the local population;
  5. An improvement in local transport links and property prices; and
  6. The absence of existing competition actually being eliminated by the restriction.

Therefore just because a provision is restrictive does not mean that it will be void under the Competition Act. However each case will be judged on its own merits and it might be suggested that it is the second of these two examples than runs the greater risk of falling foul of the Competition Act.

'Hardcore' restrictions

Whilst the exemptions may come to the aid of many restrictions in land agreements, they do not apply to the most serious which can be found in paragraph 11 of European Commission Notice on Agreements of Minor Importance. Of most relevance to land agreements is the restriction which fetters the ability of a party to a land agreement to determine a sale price. Sale price could include the price for which land subject to a tenancy is disposed of by a tenant but could conceivably also relate to a restriction on the price for which a tenant sells its own goods. This is likely to be of most relevant to those in the property world when considering provisions in leases and other land agreements relating to disposal and alienation.

In practice land owners who wish to make disposals and landlords with leases that permit alienation must think about the extent to which the Competition Act comes in to play. This is in particular given the sanctions that may apply, both in terms of the remedies available to the OFT but perhaps more importantly because a clause falling foul of the Competition Act which is not saved by the exemptions will be rendered void furthermore, to the extent that the clause cannot be severed from the remainder of the land agreement the agreement itself could be rendered void.

In the next briefing we will be looking a little more closely at some of the commonly encountered provisions in land agreements to which the Competition Act will come into play.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Jennifer Chappell
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.