Irish Competition Authority Decisions

1. Notification was made by Green Property plc 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 Green Property plc and its tenants at Northside Shopping Centre.

2. The notification concerns the standard lease relating to the shop units at Northside Shopping Centre, Coolock, Dublin 5 between Green Property plc as lessor and 70 tenants.

3. Green Property PLC is a publicly quoted company involved in investment and the development of property and it is the owner of the Northside Shopping Centre. The tenants are engaged in various retail and service activities at the shopping centre.

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

(a) Under clause 3.10 of Section III the tenant covenants with the landlord:

"(i) To use the demised premises for the purpose of and not without the Lessor's consent in writing to use or permit or suffer the same or any part thereof to be used for any other purpose and not to permit any business to be operated in or from the demised premises by any concessionaire or licensee without the prior written consent of the Lessor.

(ii) Not without the previous consent in writing of the Lessor to operate manage or be concerned in the operation or management of any other general retail store within a radius of two and a half miles of the Northside Shopping Centre it being recognised that to do so might be detrimental to the interests of the Northside Shopping Centre and the lessees and traders therein"

(b) Under clause 3.12(a) of Section III the tenant covenants with the landlord:

"Not to assign, sub-let, part with or share possession of the demised premises or any part thereof without the consent in writing of the Lessor (such consent in the case of an assignment or sub-letting of the entire of the demised premises not to be unreasonably withheld) AND provided the under Lessee shall enter into a direct covenant with the Lessor to perform and observe all the covenants (other than for payments of rent) and conditions herein contained including a covenant not to further assign or underlet or part with possession of the premises or any part thereof in any manner which shall be inconsistent with the provisions of this covenant".

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

In its comprehensive submission Green Property argued that the standard lease does not have as its object or effect the prevention, restriction or distortion of competition in any trade in goods or services in the State. As regards clause 3.10(ii) the company stated

"With regard to the restriction in clause 3.10(ii), Green firstly submits that, in practice, should any tenant coming in to the Centre request the deletion of this clause, Green consents to such deletion. It must be assumed that where a tenant does not request that the clause be deleted, that tenant does not intend operating or managing a retail store within two and a half miles of the Centre. Consequently the clause has no practical effect, anti-competitive or otherwise. Secondly, Green submits that it has never brought an action to enforce the clause and would not envisage doing so. Consequently once again, Green submits that the clause does not therefore have an anti-competitive effect within the meaning of Section 4(1) of the Act."

6. Despite these arguments the Authority was concerned that the effect of this clause in the standard lease was to restrict tenants of the centre from being involved in any retail business elsewhere within a radius of two and a half miles from the shopping centre. This represented an area of almost 20 square miles of the outer suburbs of Dublin city. Following correspondence with the Authority, by letter of 5 January 1994, Green Property plc confirmed that clause 3.10(ii) in the standard lease would be deleted.

7. The Authority considers that Green Property plc and the tenants are undertakings and that the notified lease is an agreement between undertakings. The agreement has effect within the State.

8. The Authority considers that the notified standard agreement, as amended, and its restricted 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 of 10 September, 1993). The Authority therefore considers that the amended standard agreement between Green Property PLC and its tenants does not offend against section 4(1) of the Competition Act, l99l.

9. 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 amended standard agreement between Green Property plc and its tenants (Notification No CA/423/92) in relation to the lease of the premises at Northside Shopping Centre, notified under Section 7, as amended by letter of 5 January, 1994, does not offend against Section 4(1) of the Competition Act, l99l.

For the Competition Authority

Des Wall

Member

4 February 1994