Friday, 20 August 2010

Off-piste - competition law treatment of land agreements

The Competition Act 1998 excluded land agreements from the Chapter I prohibition. It didn't just exempt them, as some commentators are saying, it excluded them altogether, as it originally did with vertical agreements too. Vertical agreements were later brought back into the fold, but since they enjoyed exemption it didn't actually make a huge difference. Now the land agreements exclusion is going to be discontinued (though not until next April).
The expression "land agreement" meant "an agreement between undertakings which creates, alters, transfers or terminates an interest in land, or an agreement to enter into such an agreement". The concept of an "interest in land" is deliberately wide, and neutral. It had no pre-existing meaning in English or Scots law, to start with. It is defined as including "any estate, interest, easement, servitude or right in or over land (including any interest or right created by a licence), and in Scotland also includes any interest under a lease and other heritable right in or over land including a heritable security". Restrictions on the use of commercial property, restrictions on to whom properties may be let, restrictions on to whom land may be sold, and requirements that tenants buy services from particular suppliers (for example, cleaning services or insurance) were all removed from the purview of competition law by the exclusion.
Not that they will now automatically be prohibited. Only if there is an appreciable effect on competition will the prohibition apply anyway (unless price-fixing or market-sharing is involved), and even if it does there's always the possibility of exemption. These days, exemption is, initially at least, a matter for the parties to the agreement, so landlords (and the paradigm case is probably that of the shopping centre, where for various understandable reasons it is not thought desirable to have several mobile phone suppliers next door to one another) have to assess their own restrictions and decide whether they deliver a benefit to the public. A good mix of retailers in a shopping centre would probably be just such a benefit.
In any case, property lawyers are going to have to become more familiar with competition law than they have been up to now.

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