Irish Competition Authority Decisions

1. Notification was made by Drakebury Construction 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 standard lease between Drakebury Construction Limited and the Investor Landlords and the tenants.

2. The notification concerns the standard lease relating to the letting of shop units in the Eyre Square Centre, Galway, between Drakebury Construction Ltd as Freeholder/Landlord, 44 individuals or partnerships as Investors/Immediate Landlords and the tenants of 52 units.

3. Drakebury Construction Ltd is the Freeholder and original Landlord of the Eyre Square Centre. The Investors hold 9,000 year intermediate leases from the Freeholder and are the immediate landlords of shop units at the centre. The tenants are engaged in various retail and service activities at the Centre.

4. The notified standard lease contains the following restricted user clauses viz.

(a) Under clause 4.11.1 the tenant covenants with the landlord "Not to use the whole or any part of the Demised Premises:

1. For a period of 4 years and 6 months commencing on the Term Commencement Date for the purposes of the business of Allied Irish Banks plc, National Irish Bank Limited, Ulster Bank Limited or any Trustee Savings Banks.

(b) Under clause 4.11.2 the tenant covenants with the landlord

"Not without the prior consent in writing of the Landlord or its Agent thereunto lawfully authorised to use or to permit or suffer or allow the Demised Premises or any part or parts thereof to be used for any purpose other than as a retail shop for the Permitted Business and for no other purpose or purposes whatsoever...... PROVIDED ALWAYS AND IT IS HEREBY AGREED AND DECLARED that upon any application by the Tenant or any authorised under-tenant or the Tenant for liberty to alter or change the Permitted Business the Landlord shall not unreasonably withhold its consent to such proposed change of user...."

(c) Under clause 4.25.1 the tenant covenants with the landlord

"Not to assign, transfer, underlet, charge, mortgage, encumber, hold on trust for another or part with the possession or occupation of the Demised Premises or any part thereof or suffer any person to occupy the Demised Premises or any part thereof as a licensee or as concessionaire BUT SO THAT NOTWITHSTANDING the foregoing the Landlord shall not unreasonably withhold its consent to an assignment, transfer, under-letting, charging, mortgaging or encumbering of the entire of the Demised Premises or to the suffering of any person to occupy the entire of the Demised Premises as a licensee or concessionaire....."

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

5. The notifier has supplied details of the Permitted User under clause 4.11.2 attaching to each lease whereby the tenant is restricted to particular specified retail or service activities. In addition details of the exclusive user granted by way of side letters in respect of 21 tenancies have been supplied.

6. The Authority considers that Drakebury Construction Ltd, the Investor Landlords and their tenants are undertakings and that the notified leases are agreements between undertakings. The agreements have effect within the State.

7. 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 of 10 September, 1993, pp. 665-667). The Authority therefore considers that the notified agreements between Drakebury Construction Ltd, the Investor Landlords and their tenants do not offend against section 4(1) of the Competition Act, 1991.

8. 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 Drakebury Construction Ltd, the Investor Landlords and their tenants in relation to the lease of premises at Eyre Square Centre, Galway, notified under Section 7 on 30 September 1992 (notification no. CA/244/92E), do not offend against Section 4(1) of the Competition Act, 1991.

For the Competition Authority

Des Wall

Member

15 December 1993