Competition laws hit land agreements

From 6 April 2011 the Competition Act 1988 will apply to land agreements. Land agreements were previously exempt from the effects of the Competition Act but, following a review of the groceries market, the Competition Commission found that the major supermarkets were land banking to prevent the development of competing stores around their premises. As a result the exemption for land agreements has been withdrawn and the Competition Act will apply. It is important to note that the Act will apply not only to new land agreements entered after 6 of April but also to agreements already in existence meaning in some cases a review of existing agreements will be necessary.

The types of agreement most likely to be at risk are exclusivity clauses and use restrictions in leases and also title conditions limiting the use of property.

However, many land agreements which would otherwise be liable to enforcement action will fall within one of the two main exceptions:  

  1. the restrictions do not have an appreciable effect on trade;
  2. that the positive benefits outweigh any customer disadvantage wrought by the restriction.

The Office of Fair Trading have issued detailed guidance on the application of the Competition Act to land agreements here

A summary of the guidelines is available here