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 lease between Todd Burns & Company Limited and Power Supermarkets Limited.

2. The notification concerns the lease of part of the premises at 19/21 Mary Street, Dublin 1 between Todd Burns & Company Ltd (and their successors in title ABF Properties Ltd), as landlord and Power Supermarkets Ltd, as tenant.

3. Todd Burns & Company Ltd were engaged in the business of a Department store. Their successors in title ABF Properties Ltd are the owners and landlords of the Mary Street premises. Power Supermarkets Ltd is engaged in the business of supermarket and department store, with outlets throughout the State.

4. The notified lease was made on 12 June 1964 for a period of sixty-one years from 1 February 1963. Following the acquisition by Power Supermarkets of the landlord's interest in Todco Ltd the agreement was amended in February 1967. The restricted user clauses in the amended lease are as follows:

(a) Under clause 2(q) the tenant covenants "Power shall not assign or sub-let any part or parts of the demised premises or part with or share the possession of the demised premises or any part thereof without the previous written consent of the Landlord that consent not to be unreasonably withheld..."

(b) Under clause 3(g) the landlord covenants "The landlord shall not use or let any part or parts of its premises 19/21 Mary Street Dublin not hereby demised to Power or any part or parts of its premises situate at 47 Mary Street Dublin for the purpose of a Supermarket or self-service store PROVIDED ALWAYS that this sub-clause shall not apply to any usage or letting at the date hereof."

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

5. The Authority considers that Todd Burns & Company Ltd was, and that its successor in title ABF Properties Ltd and Power Supermarkets Ltd are undertakings and that the notified lease is 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. 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.

7. In addition, clause 3(g) of the agreement restricts the landlord from leasing the adjoining and nearby premises to anyone for the purpose 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 tenant may do so by occupying any other premises within the same area. The Authority therefore considers that the notified agreement between Todd Burns & Company Ltd (and ABF Properties Ltd as successors in title) and Power Supermarkets Ltd does not offend against Section 4(1) of the Competition Act,1991.

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 agreement between Todd Burns & Company Ltd, now ABF Properties Ltd, and Power Supermarkets Ltd in relation to the lease of the premises at 19/21 Mary Street, Dublin 1, notified under Section 7 on 30 September,1992 (notification no. CA/594/92E), does not offend against Section 4(1) of the Competition Act,1991.

For the Competition Authority

Des Wall

Member

21 April,1994.