Irish Competition Authority Decisions

1. Notification was made by Power Supermarkets Ltd (Powers) on 30 September 1992 with a request for a certificate under Section 4(4) of the Competition Act 1991 or, in the event of a refusal by the Competition Authority to issue a certificate, a licence under Section 4(2), in respect of leases between Powers and tenants at Artane Castle Shopping Centre.

2. The notification concerns the leases of shop units at Artane Castle Centre, Kilmore Rd., Artane, Dublin 5 between Powers as Landlord and 8 separate tenants.

3. Power Supermarkets Ltd is engaged in the business of a supermarket with outlets throughout the State. The tenants are engaged in various retail or service activities at the shopping centre.

4. The standard shopping centre lease notified relates to Unit 5 and was executed on 29 April 1991 for a term of 35 years. The restricted user clauses in the lease are as follows:-

(a) Under clause 4.27 the tenant covenants

".1 Not to use the Demised Unit for any of the prohibited users." ( Prohibited users are defined as "...subject to the permitted user set forth in Part II of the First Schedule hereto the sale of food, groceries and food products")

".2 Not without the prior consent in writing of the Landlord or its Agent lawfully authorised to use or to permit or suffer or allow the Demised Unit or any part or parts thereof to be used for any purpose other than as set forth in Part II of the First Schedule hereto and for no other purpose or purposes whatsoever...."

Part II of the First Schedule reads under the heading "Permitted User"-

"The Retail Sale of Wallpaper and Paints, DIY products, tiles, curtains and household fashions for furnishing purposes to include........"

(b) Under clause 4.26 the tenant covenants

" Not to assign transfer mortgage charge ..... or part with the possession or occupation of the Demised unit or any part thereof..... BUT SO THAT NOTWITHSTANDING the foregoing the landlord ....shall not unreasonably withhold its consent......"

In addition, there are a number of other standard restrictive covenants and obligations in the sample lease.

5. A further lease dated 3 May 1991 was notified between Power Supermarkets Ltd as Landlord and Mc Donald's Restaurants of Ireland Ltd as tenant. Under clause 4.19.2 (a) of this lease the tenant is restricted to the Permitted user defined "As a Restaurant Take Away Restaurant and Drive Through Restaurant including the sale of Intoxicating Liquor for consumption on the Demised Unit". The tenant covenants under clause 4.19.1 (a) "Not to sell or permit or suffer the sale of groceries or grocery products in the Demised Unit or to use the Demised Unit as a Butcher's shop or as an Off Licence for the sale of intoxicating liquor for consumption off the Demised Unit......"

This lease also contains a number of other standard restrictive covenants as well as a restriction on subletting or parting with possession of the whole or part of the premises.

6. Powers have advised that similar provisions to those at paragraph 4 apply to each of the other tenancies with a Permitted User clause restricting each tenant to particular specified trading activities.

7. The Authority considers that Power Supermarkets Ltd and the tenants are undertakings and that the notified leases are agreements between undertakings. The agreements have effect within the State.

8. The Authority considers that the notified agreements, and their restricted and exclusive user clauses and the other standard restrictive clauses and obligations, do not have the object or effect of preventing, restricting or distorting competition in trade in any goods or services in the State or in any part of the State, for the reasons given in the Notice of the Authority of 2 September 1993 in respect of shopping centre leases (Iris Oifigiuil 10 September 1993, pp.665-667). The Authority therefore considers that the notified agreements between Power Supermarkets Ltd and the tenants do not offend against Section 4 (1) of the Competition Act 1991.

9. The Competition Authority has issued the following certificate.

The Competition Authority certifies that in its opinion, on the basis of the facts in its possession, the agreements between Power Supermarkets Ltd and the tenants in relation to the lease of premises at Artane Castle Centre, Kilmore Rd, Artane, Dublin 5 notified under Section 7 on 30 September 1992 (notification no. CA/598/92E), do not offend against Section 4 (1) of the Competition Act, 1991.

For the Competition Authority

Des Wall

Member

3 December 1993