Irish Competition Authority Decisions

1. Notification was made by Grittar 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 by way of lease agreement between Grittar and David J. Bolger.

(a) Subject of the notification

2. The notification concerns the agreement for a sale by way of lease of a plot of ground at Tandy's Lane, Lucan, Co Dublin between Grittar as Vendor and David J. Bolger as purchaser. Subsequently 88% of the plot has been used for housing construction and a transfer in lieu of a lease has been granted in respect of this portion.

(b) The parties involved

3. Grittar is a subsidiary of Power Supermarkets which trades as a supermarket with outlets throughout the State. David J. Bolger is engaged in property development.

(c) The notified arrangements

4. The notified sale agreement was executed on 15 February 1991. The agreement consists of the general conditions of sale as well as special conditions. The special conditions provide that the sale will be carried out by way of a 500 year lease (the draft of which accompanies the sale agreement) and that provided, inter alia, that the vendor obtains planning permission for housing development, the Vendor shall be bound without further consideration to transfer to the Purchaser freehold title to the reversion to the said lease on a phased basis as housing and ancillary works on the plot are completed. The special conditions require the purchaser to enter into the covenant set out under but also provide that "...in the event of the Purchaser completing the conditions set out above and requiring the Vendor to transfer freehold title then the question of granting a lease relating to property so transferred with freehold title shall not arise and in the transfer of such freehold title no restrictive covenant of any nature shall then apply ......".

5. The covenant set out in the sale agreement to be included in the lease is as follows:

"The Lessee hereby further covenants with the Lessor as the owner of the Supermarket in Lucan Shopping Centre, Lucan, County Dublin not at any time to sell supply stock or keep groceries food foodstuffs food products or drinks in an area exceeding one thousand square feet in the demised premises or suffer or permit any such action or activity save that use of the demised premises or part thereof as a Restaurant licensed premises, hotel or guest house shall be permissible and not to make any transfer, letting subletting or grant any licence to use or part with or share the possession of the said demised premises or any part thereof save on the basis that any such party shall first covenant under seal with the Lessor in manner similar to this covenant".

6. The Authority considers that Grittar and David J. Bolger are undertakings and that the notified sale agreement is an agreement between undertakings. The agreement has effect within the State.

7. The agreement contains a number of standard conditions relating to the sale of the property which do not raise issues under the Competition Act. In addition the special conditions to the sale require the purchaser in certain circumstances to enter into a lease with restrictive conditions relating to the use of the land i.e. that if the plot is not used for housing or development ancillary to housing other buildings on the plot in excess of 1,000 square feet cannot be used for the sale of food or alcoholic drinks (excluding restaurant/licensed premises/hotel sales). Already 88% of the site has been used for housing purposes and title transferred without any lease.

8. In the Authority's opinion, the inclusion of restrictive and exclusive user clauses in agreements for the sale of land cannot normally be regarded as preventing, restricting, or distorting competition within the State or any part of it. The purchaser acquired the land for his particular purposes, i.e. housing development. If he seeks to develop a larger premises for the sale of food or alcoholic drink or seeks to enter into this business himself, he is free to do so at other premises in the locality or elsewhere within the State, subject to the grant of planning permission. Similarly any other undertaking wishing to compete with either the vendor or purchaser is not restricted by the agreement from doing so in the 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.

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 agreement between Grittar and David J. Bolger in relation to the sale by way of lease of the plot of ground at Tandy's Lane, Lucan, Co. Dublin, notified under Section 7 on 30 September, 1992, (Notification No. CA/605/92E) does not offend against Section 4(1) of the Competition Act, l99l.

For the Competition Authority

Des Wall

Member

23 June 1994