Any clause in any contract (including a lease) is void if it is anti-competitive

In Martin Retail Group Ltd v Crawley Borough Council, during the course of 1954 Act proceedings for the renewal of a lease, the tenant successfully persuaded the County Court to declare that the landlord’s proposed user clause was anticompetitive.

The renewal lease was of a shop in a parade on a housing estate. All of the shops in the parade were let by the council on terms that restricted their use to a particular retail business.

The use of the shop in question was restricted to a newsagent, tobacconist and post office counter. The council wanted to re-impose this restriction in the renewal lease. But the tenant also wanted to sell “convenience goods” (i.e. groceries and other household products). This would compete with a supermarket in the same parade. The council, as landlord, refused.

The tenant argued that the proposed restriction, was anti-competitive.

The council claimed that their restrictions encouraged a greater range of available goods and services, which benefitted local people.

The council also argued that businesses would be less likely to take a lease in the parade if their trade was not protected.

The judge sided with the tenant. The council’s policy of trying to achieve a suitable tenant mix in the parade was not in itself anti-competitive. But the particular restriction that the council was seeking to impose on the tenant would unlawfully eliminate competition in convenience goods in the parade.

This is the first case of this kind and is an important one for landlords seeking to control tenant mix in their schemes.