Irish Competition Authority Decisions

1. Notification was made by Power Supermarkets 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 sale agreement between McMullan Bros Limited and Power Supermarkets Limited.

2. The notification concerns an agreement relating to the sale of part of the site of the former Naas Railway Station, Naas, Co. Kildare between McMullan Bros Ltd as Vendor and Power Supermarkets Ltd as Purchaser.

3. McMullan Bros Limited is engaged in the distribution of motor fuels and was the owner of a petrol filling station on the retained part of the Naas site. Power Supermarkets Limited trades as a supermarket with outlets throughout the State.

4. The notified agreement was made on 3 April, 1969. The agreement provided for the sale of part of the site to Powers. The agreement also included the following restrictive covenants viz.

(a) Under clause 3 (A) the purchaser covenants with the vendor " Not to use or permit to be used Powers premises or any part thereof as a petrol filling or service station, Garage or Show Room for the sale of petrol motor oils or greases (other than the Vendor's products) or mechanically propelled vehicles and not in any way to compete or allow others to compete with the Vendor its Tenants Lessees or Licencees in the sale of any of these products which are sold at the adjoining petrol filling station of the Vendor."

(b) Under clause 4(f) the Vendor covenants with the purchaser "Not to use or permit to be used McMullan's premises or any part thereof for any of the businesses of a retailer of groceries or provisions seller of beer wine or spirits for consumption on or off the premises Cafe or Restaurant Baker Confectioner Butcher Victualler Fish-Monger Shoe Shop Draper of any description Jeweller Hardware Shop or Supermarket of any description."

The restricted user clauses above are binding on assignees and successors of each party. The agreement also contains a number of provisions concerning access, maintenance, prevention of nuisance, boundaries, buildings, etc.

5. The Authority considers that McMullan Bros Limited and Power Supermarkets Limited are undertakings and that the notified sale agreement is an agreement between undertakings. The agreement has effect within the State.

6. The sale agreement contains standard restrictions and provisions relating to each party's occupancy and sharing of the site which do not raise issues under the Competition Act. In addition it contains restrictive user clauses on both the Vendor and the Purchaser. The vendor has covenanted not to use his premises on the site for the purpose of retailing groceries or provisions (which is the business of Power Supermarkets), and the purchaser has covenanted not to use his adjoining premises for the purpose of a petrol filling or service station or garage (which is the business of McMullan Bros Ltd). In the Authority's opinion, the inclusion of exclusive user clauses in agreements for the sale of an adjoining premises cannot be regarded as preventing, restricting, or distorting competition within the State or any part of it. Powers purchased the premises for its intended use i.e. the business of supermarket. If Powers sought to enter the business of petrol retailing it is free to enter this business at other sites in the near vicinity or elsewhere in the State. Similarly while McMullans are prevented from engaging at the site in retailing of the type of goods sold at supermarkets they are free to engage in this form of retailing at other premises either in the near vicinity or elsewhere in the State. Similarly any other undertaking wishing to operate a business in competition with either the purchaser or the vendor is not restricted from doing so in the immediate vicinity or elsewhere in the State. The Authority therefore considers that the notified agreement 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 McMullan Bros Limited and Power Supermarkets Limited in relation to the sale of a premises at Naas Railway Station, Naas, Co. Kildare notified under Section 7 on 30 September, 1992 (notification no. CA/591/92E ), does not offend against Section 4(1) of the Competition Act, 1991.

For the Competition Authority

Des Wall

Member

21 April 1994