Irish Competition Authority Decisions

1. Notification was made by Power Supermarkets Limited 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 a lease between Riga Limited and Power Supermarkets Limited .

2. The notification concerns the lease of the supermarket unit, Unit 1, New City Centre, Paul Street, Cork, between Riga Ltd as landlord and Power Supermarkets Ltd as tenant.

3. Riga Limited is the owner and landlord of the Paul St shopping centre. Power Supermarkets Limited trades as a supermarket with outlets throughout the State.

4. The notified shopping centre lease was made on 26 March 1985 for varying terms relating to different parcels of property ranging from 84 to 998 years. The lease contains the following restrictive clauses:

(a) Under clause 4.22 the tenant covenants "Not without the prior consent in writing of the Landlord and its Agent thereunto lawfully authorised to use or permit or suffer or allow the Demised Unit or any part or parts thereof to be used for any purpose other than that as set forth in Part II of the first Schedule hereto............. PROVIDED ALWAYS AND IT IS HEREBY AGREED AND DECLARED that upon any application by the tenant or any under-Tenant of the Tenant for liberty to alter or change the aforesaid permitted user of the Demised Unit the Landlord shall not unreasonably withhold its consent to such proposed change of user............."

(b) Part II of the First Schedule reads under the heading "Permitted User As a Supermarket and/or Departmental Shop or store and/or Retail Shop or store including the sale or baking of food or food products of all kinds trading by way of licensing and franchising and making concessions and for the sale of Intoxicating Liquor whether for consumption on or off the premises."

(c) Under Clause 5.5.1 the landlord covenants that " The Landlord for itself it's successors and assigns hereby covenants with the Tenant that it it's Successors and Assigns will not lease or sell any unit in the Centre for the purposes of a butchers shop or a greengrocers shop" while under clause 5.5.2 "The Landlord hereby covenants to refuse its consent to a change of user of any unit whereby the unit would be used as a Butchers shop or a Greengrocers shop."

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

5. The Authority considers that Riga Limited and Power Supermarkets Limited are undertakings and that the notified lease is an agreement between undertakings. The agreement has effect within the State.

6. The Authority considers that the notified agreement, and its restricted and exclusive user clauses and the other standard restrictive clauses and obligations, does 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 agreement between Riga Limited and Power Supermarkets Limited, does not offend against Section 4(1) of the Competition Act, l99l.

7. 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 agreement between Riga Limited and Power Supermarkets Limited in relation to the lease of the premises in Paul Street Shopping Centre, Cork, notified under Section 7 on 30 September 1992 (notification no. CA/592/92E), does not offend against Section 4(1) of the Competition Act, l99l.

For the Competition Authority

Des Wall

Member

15 December 1993