Irish Competition Authority Decisions

1. Notification was made by Fitzwilliam Trust Company 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 Fitzwilliam Trust Company and Linen Supply of Ireland Limited and between Fitzwilliam Trust Company and Texas Homecare (Ireland) Limited.

2. The notification concerns the lease of 2 adjoining premises at Holylands, Nutgrove Ave, Rathfarnham, Dublin 14 between Fitzwilliam Trust Company as lessor and 2 tenants i.e. Linen Supply of Ireland Limited and Texas Homecare (Ireland) Limited.

3. Fitzwilliam Trust Company is the owner and landlord of the premises at Holylands. Linen Supply of Ireland Limited was engaged in the business of laundry and towel rental. Texas Homecare (Ireland) Limited trades as a DIY Homecare store at several locations in the State.

4. The notified lease relating to the Linen Supply of Ireland Limited was made on 10 November, 1989 for a period of 35 years from 3 November, 1989. The restricted user clauses in the lease are as follows:

(a) Under clause 3.10 the tenant covenants with the landlord "To use the demised premises for the purpose of offices, stores, staff facilities and an office canteen".

(b) Under clause 3.11(1) the tenant covenants with the landlord "Not to assign underlet or part with or share the possession or occupation of the Demised Premises or any part thereof or otherwise alienate the same or suffer any person to occupy the Demised Premises or any part thereof as a licensee or concessionaire but so that notwithstanding the foregoing the Landlord shall not unreasonably withhold its consent....."

(c) Under clause 3.12(b) the tenant covenants ".....not to use or permit to be used the demised premises or any part thereof for the sale of food other than for use as a staff canteen."

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

5. The notified lease relating to Texas Homecare (Ireland) Limited was made on 29 December, 1990 for a period of 35 years from 31 December, 1990. The restricted user clauses in the lease are as follows:

(a) Under clause 3.10 the tenant covenants with the landlord "To keep the demised premises for the purpose of the sale of D.I.Y. and Homecare products and materials and confectionery sales at check outs together with full ancillary offices and a coffee shop no larger than 2,500 square feet".

(b) Under clause 3.11(1) the tenant covenants with the landlord "Not to assign underlet or part with or share the possession or occupation of the Demised Premises or any part thereof or otherwise alienate the same or suffer any person to occupy the Demised Premises or any part thereof as a licensee or concessionaire but so that notwithstanding the foregoing the Landlord shall not unreasonably withhold or delay its consent to an assignment or under lease of the entire of the demised premises ...."

(c) Under clause 3.12 the tenant covenants "......not to use or permit to be used the demised premises or any part thereof for the sale of food or food products save as permitted in clause 3.10."

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

6. The Authority considers that Fitzwilliam Trust Company, Linen Supply of Ireland Limited and Texas Homecare (Ireland) Limited are undertakings and that the notified leases are agreements between undertakings. The agreements have effect within the State.

7. The Lease agreements contain standard restrictions and obligations on both landlord and tenant which are necessary for the maintenance of the landlord/tenant relationship in respect of the tenancies. These do not raise issues under the Competition Act. In addition each agreement also provides, by way of the permitted user clause 3.10 a restriction on the use of each premises. Such permitted user clauses are normally based on the user proposed by the tenant at the time the lease is first executed but are also governed by considerations such as the physical characteristics of the premises, the requirements of the Planning Acts and the landlord's own policy, when granting the lease, on how the premises should be used. The Authority considers that such user restrictions in the letting of premises do not have the object or effect of preventing, restricting or distorting competition in the State or any part of the State. In taking up the lease the tenant negotiates the permitted user required for his business. This is reflected in the lease but if he were subsequently to seek a change of user he could in most instances have recourse to the provisions of the Landlord and Tenant Act, 1980 which provide that a Landlord cannot unreasonably withold consent to a change of user requested by a tenant. In addition a tenant is free to undertake other businesses in many other premises, both in the vicinity or elsewhere in the State. The effect of the agreements are not therefore anti-competitive. The Authority therefore considers that the notified agreements between Fitzwilliam Trust Company and Linen Supply of Ireland Limited and Texas Homecare (Ireland) Limited do not offend against section 4(1) of the Competition Act, l99l.

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 Fitzwilliam Trust Company and Linen Supply of Ireland Limited and Fitzwilliam Trust Company and Texas Homecare (Ireland) Limited in relation to the lease of premises at Holylands, Nutgrove Ave, Rathfarnham, Dublin 14 notified under Section 7 on 30 September 1992 (CA/922/92E), do not offend against Section 4(1) of the Competition Act, l99l.

For the Competition Authority

Des Wall

Member

15 December 1993