The dos and don’ts of competition law for property professionals

Property / 31 October 2018

The Competition and Markets Authority (CMA) has issued some helpful dos and don’ts guidance to businesses who try to impose constraints in land agreements which restrict competition.

The guidance comes after the CMA fined Heathrow Airport a whopping £1.6 million for breaching competition law.  Heathrow’s crime? Putting a clause in a lease agreement with one of the airport hotels, which restricted how the hotel should set its parking prices for non-hotel guests.

The guidance reminds us there can be hefty penalties for breaching competition law and gives some pointers as to how to avoid falling foul of the rules.

‘What’s this got to do with property?’ you may ask.  Well, the law changed in 2011 and brought property agreements under the umbrella of competition law. This means that agreements for lease and contracts for the sale of land must not contain anti-competitive restrictions.  Not all restrictions in land agreements will breach competition law, but here are some examples which probably will:

  1. A clause which restricts the price for which goods or services can be sold from the land;
  2. A covenant in the lease of a shop preventing another similar retailer from operating next door; or
  3. A land agreement that restricts how the land can be used, with the aim of dividing up territories or customers.

The CMA guidance rightly urges businesses to take legal advice before signing up to a potentially restrictive agreement.  Importantly, it also reminds businesses ‘Don’t assume that existing land agreements are legal because they have been checked by lawyers in the past’.  In other words, a user restriction in your lease which may have been valid previously might not be valid now.

If you are concerned that you or your business may be a party to an anti-competitive agreement we can help, so please get in touch.

You can read the CMA’s full dos and don’ts guidance here.

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