Irish Competition Authority Decisions

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Cite as: [1993] IECA 59

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Riga Ltd/Tenants at Douglas S. C. [1993] IECA 59 (5th October, 1993)

COMPETITION AUTHORITY

Competition Authority Decision of 5 October 1993 relating to a proceeding under Section 4 of the Competition Act, l99l.

Notification No: CA/223/92E - Riga Ltd/Tenants at Douglas Shopping Centre.

Decision No: 59

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£0.70 incl. postage.

Notification No. CA/223/92E - Riga Ltd/Tenants at Douglas Shopping Centre

Decision No. 59

Introduction

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

The Facts

(a) The subject of the notification

2. The notification concerns the leases of shop units at Douglas Shopping Centre, Douglas, Co. Cork between Riga Ltd as landlord and 30 separate tenants of the units.

(b) The parties involved

3. Riga Ltd is engaged in the business of letting shop units at Douglas Shopping Centre. The tenants are engaged in various trading activities at the shopping centre.

(c) The notified arrangements

4. The standard shopping centre leases fall into 3 categories with the following restricted user clauses viz.

I. Leases executed prior to March 1991

(a) Under clause 2(18)(a) the tenant covenants "Not to use or permit the demised premises or any part thereof to be used for any purpose other than "

(b) Under clause 2(20)(a) the tenant covenants "Not to assign underlet or part with possession....of the demised premises or any part thereof...."

II. Leases Executed since March 1991

(a) Under clause 4.22 the tenant covenants "Not without the prior consent in writing of the landlord ......to use or permit ..... the demised premises 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......

(b) Under clause 4.23.2 the tenant covenants "Not at any time to use the demised premises or any part thereof ..... as a butcher shop, or a greengrocers shop, or as a Building Society or Bank or for the sale food......"

(c) Under clause 4.21 the tenant covenants "Not to assign transfer or underlet or part with .. the possession or occupation of the Demised premises or any part thereof..... BUT SO THAT NOTWITHSTANDING the Landlord shall not unreasonably withold its consent......"

III Supplemental leases for certain of the older lettings

Under clauses 21, 22 and 23.2 of the Sixth Schedule to the standard supplemental lease the tenant provides covenants similar to those at II (c), (a) and (b) above.

Riga Ltd have supplied details of the permitted user applicable to each of the 30 tenancies. In addition they have also indicated that certain exclusivity of use to tenants has been provided for by way of separate covenants or side letters. These include a covenant by the lessor (to a supermarket) not to allow any other unit operate for the sale of foodstuffs or groceries save where the area does not exceed 1500 square feet and a side letter committing the landlord to best endeavours not to permit tenants of areas of the shopping centre to operate as a chemist shop.

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

Assessment - The applicability of Section 4 (1)

5. The Authority considers that Riga Ltd and the tenants are undertakings and that the notified leases are agreements between undertakings. The agreements have effect within the State.

6. The Authority considers that the notified standard agreements, and their restricted and exclusive user clauses and the other 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 Riga Ltd and the tenants do not offend against Section 4 (1) of the Competition Act 1991.

The Certificate

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 agreements between Riga Ltd and the tenants in relation to the leases of shop units at Douglas Shopping Centre, Douglas, Co. Cork notified under Section 7 on 30 September 1992 (notification no. CA/223/92E), do not offend against Section 4 (1) of the Competition Act, 1991.

For the Competition Authority

Des Wall

Member

5 October 1993