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 a Deed of Covenant between Letterkenny Shopping Centre Ltd and Powers relating to the lease of premises.

2. The notification concerns a Deed of Covenant relating to the lease of the Supermarket premises at Letterkenny Shopping Centre, Letterkenny, Co. Donegal between Powers as Covenantor and Tenant and Letterkenny Shopping Centre Ltd as Landlord.

3. Powers trades as a supermarket with outlets throughout the State including Letterkenny Shopping Centre. Letterkenny Shopping Centre Ltd is landlord and manager of the Shopping Centre.

4. The agreement notified in draft form is defined as a Transfer and Covenant Agreement to form part of the schedules attached to the original lease agreement dated 24 September 1985. The restricted user clauses in the agreement are as follows:-

(a) Under clause 3.1(1)(a) the tenant covenants "To keep the premises for the purposes of Supermarket and Department Store to include Bakery and goods preparation facilities and the sale of Liquor for consumption off the premises only. PROVIDED ALWAYS that the premises or any part thereof shall not be used for the purpose of a Restaurant or Cafe and not without the consent of Letterkenny Management in writing, which shall not be unreasonably withheld to use or permit or suffer the same or any part thereof to be used for any other purpose.

(b) Under clause 4.4 Letterkenny Shopping Centre Ltd covenants "That Letterkenny Management shall not permit any retail unit in Letterkenny Shopping Centre with a nett floor area in excess of 5000 square feet (inclusive of aisles and checkout space) to be used wholly or partly for the sale of food or food products whether on the first leasing of the unit or after assignment or otherwise PROVIDED HOWEVER that in the event of the lease or assignment of such a unit to a Department Store the proprietors of which are known to and approved by the Covenantor the above restriction will be limited to a nett floor area in excess of 9,000 square feet inclusive of aisles and check-out space. In the event of an occupier of any unit trading in breach of the terms of this covenant, Letterkenny Management shall immediately take all necessary steps, including legal proceedings where necessary to prevent such user."

(c) Under clause 3.2(5) the tenant covenants "Not to assign or underlet the whole of the demised unit except for the purposes specified.......

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

5. The Authority considers that Letterkenny Shopping Centre Ltd and Powers are undertakings and that the notified agreement 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 Letterkenny Shopping Centre Ltd and Powers 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 Letterkenny Shopping Centre Ltd and Power Supermarkets Ltd in relation to the lease of premises at Letterkenny Shopping Centre, Letterkenny, Co. Donegal notified under Section 7 on 30 September 1992 (notification no. CA/883/92E), does not offend against Section 4(1) of the Competition Act, l99l.

For the Competition Authority

Des Wall

Member

15 December 1993