Irish Competition Authority Decisions

1. Notification was made by The Governor and Company of the Bank of Ireland (Bank of Ireland) 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 lease between Gardner House Company and the Bank of Ireland.

2. The notification concerns the lease of the ground floor and basement of Nos. 87 and 89 Pembroke Road, Ballsbridge, Dublin 4 between Gardner House Company (now The Institute of Chartered Accountants in Ireland) as landlord and the Bank of Ireland as the lessee.

3. The Bank of Ireland is the second largest commercial bank in Ireland with a network of 290 branches within the State. Gardner House Company was the owner and landlord of 87/89 Pembroke Road, Ballsbridge, Dublin 4. Its successor in title, The Institute of Chartered Accountants in Ireland, is similarly engaged.

4. The notified agreement was made on 12 May, 1971 between Gardner House Company as Landlord and Bank of Ireland as tenant for a period of 150 years from 29 September, 1968. The restricted user clauses in the lease are as follows:

(a) Under clause 3 (xxvi) the tenant covenants with the landlord "Not to assign, sub-let or part with the possession of the demised premises or any part thereof nor permit nor suffer any person deriving title under the Tenant so to do."

(b) Under clause 4(c) the landlord covenants with the tenant "Not to use the remainder of the building of which the demised premises form a part for any purpose which would be a competition with the Tenant which includes the transaction of hire purchase business, merchant banking, industrial banking or any corporation or business which involves the taking of deposits or the lending of money.

PROVIDED HOWEVER that the restriction imposed by this covenant shall not apply to Companies or Concerns for which the Landlord or any of its associates act as Auditors or Secretaries."

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

5. The Authority considers that Gardner House Company was , and its successors in title, The Institute of Chartered Accountants in Ireland,is , engaged for gain in the letting of property. They are therefore undertakings. The Bank of Ireland is also an undertaking. The notified agreement is therefore an agreement between undertakings. The agreement has effect within the State.

6. The Lease agreement contains standard restrictions and obligations on both landlord and tenant which are necessary for the maintenance of the landlord/tenant relationship in respect of the tenancy. These do not raise issues under the Competition Act. In addition the agreement also provides, by way of the exclusive user clause 4(c), restrictions on the use of the remainder of the building for any purpose which would be in competition with the tenant.

7. The very act of leasing the premises to a particular tenant prevents competitors of the tenant from using those premises to compete with the tenant. Clearly this cannot be regarded as preventing, restricting or distorting competition since it would imply that the leasing of a commercial premises in order to carry on a business therein was prohibited unless licensed under section 4(2) of the competition Act. Clause 4(c) also prevents the landlords from leasing the remaining part of the building to anyone for the purposes of operating a business in competition with that of the tenant. In the Authority's opinion, however, this also cannot be regarded as preventing, restricting or distorting competition within the State or any part of it. Anyone wishing to operate a business in competition with the tenants may do so by occupying any other premises within the same catchment area. In this instance there are 3 other bank branches and 2 building society branches within a radius of 150 metres from the premises. The Authority therefore considers that the notified agreement between Garner House Company and the Bank of Ireland does not offend against section 4(1) of the Competition Act, 1991.

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 Garner House Company and its successor in title, The Institute of Chartered Accountants in Ireland, and the Governor and Company of the Bank of Ireland in relation to the lease of a premises at 87/89 Pembroke Road, Ballsbridge, Dublin 4 notified under Section 7 on 30 September 1992 (notification no. CA/326/92E), does not offend against Section 4 (1) of the Competition Act, 1991.

For the Competition Authority

Des Wall

Member

10 March 1994