Competition Bill - property exclusions

Citation

(1998), "Competition Bill - property exclusions", Property Management, Vol. 16 No. 3. https://doi.org/10.1108/pm.1998.11316cab.018

Competition Bill - property exclusions

Competition Bill ­ property exclusions

Keywords Property exclusions, Property industry

The Government's publication last week of a consultation paper, which sets out the types of property transactions which should be excluded from the Competition Bill, was welcomed by retail property legal expert Mark Heighton, of Cameron McKenna. However, he warned that some of these exemptions do not go far enough.

The exclusions will allow most existing practices to continue. For example, landlords of commercial property can limit the use which a tenant makes of property, landlords of shopping centres can agree with a retailer to restrict the letting of other units in the centre to competing retailers, and people selling a part of their land can protect the value of that land by placing restrictions on the use of it.

Mark Heighton, who is a partner in the property practice group at Cameron McKenna, comments: "Because of these exclusions, the Government proposals will generally be welcomed by the property industry. However, while in broad terms the proposals would preserve the status quo, there are some relatively common types of property agreement which could still be within the Competition Bill.

"For example, at the moment, a landlord of a factory outlet scheme can ensure that the main aims of the scheme are preserved, by having a measure of control over the pricing policy of the tenant. It is proposed that restrictions of this sort should still be subject to the bill."

Mark Heighton concludes: "Interested parties should continue to lobby the DTI to ensure that these types of transactions are excluded from the bill. The Competition Bill has some complicated clauses, and those in the property industry should act now to protect property values from legislation, and ensure they have efficient legal advice."

The Competition Bill: implications for the property industry

Examples of property transactions which should be excluded from the Competition Bill:

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  landlords of commercial property will still be able to limit the use which a tenant may make of property;

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  landlords of shopping centres will still be allowed to agree with their tenants that they will not let other units in the centre to competing retailers;

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  a person who sells part of his land can protect the value of the land by placing restrictions on the use of that land (for example, not allowing the land to be used for retail purposes).

Types of property agreement which could still be within the Competition Bill:

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  Factory outlet schemes: Landlords can ensure that the main aims of the scheme are preserved, by having a measure of control over the pricing policy of the tenant. It is proposed that letting arrangements where there are restrictions on pricing should still be subject to the bill.

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  Concession arrangements: Although the bill will not apply to leases, it will still apply to licences. This means that concession arrangements, through which a particular retailer is given space within a department store, could still be caught out by the bill.

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  Restriction of land use: Sales of a part of land which restricts the use which the buyer can make both of the land sold and/or of any additional land of the buyer would be subject to the provisions of the bill.

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  Lockout agreements: Those agreements which, for example, contain restrictions on the acquisition of competing schemes would still be subject to the provisions of the bill.