Irish Competition Authority Decisions

1. Notification was made by Dairygold Co-operative Society Ltd (Dairygold) 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 Mitchelstown Co-operative Agricultural Society Ltd (Mitchelstown) and Conor and Annabella O'Brien.

2. The notification concerns an agreement relating to the sale of premises at Mill Road, Fermoy, Co.Cork between Mitchelstown as vendor and Conor and Annabella O'Brien as purchaser.

3. Mitchelstown was a multipurpose co-operative society involved in a wide range of manufacturing and trading activities including milk processing, grain trading, sale of farm inputs and requisites, and retail trading. Its successor is Dairygold which was formed in October 1990 through the amalgamation of Dairygold and Ballyclough Co-operative Creamery Ltd. Conor O'Brien is a veterinary surgeon.

4. The notified agreement was executed on 10 February 1986. The agreement provides for the standard conditions of sale of the premises with the contract subject to the purchasers securing change of user and planning permission for change of use from that of a store to a veterinary surgery and shops. Under the special conditions attached to the agreement the parties agreed that the Deed of Conveyance to the Purchasers herein shall contain the following clause "the Purchasers for themselves and their assigns and with intent to buying the premises hereby assured doth hereby covenant with the Vendor not to carry on on the premises up to the year two thousand, the sale of the following items that is;

(1) Animal feedstuffs.

(2) Fertilisers.

(3) Spray for crops and or Agri-chemicals.

(4) The hardware items hereinafter set out such as required and

utilised by Builders providers but not a finished product,

(a) Construction timber.

(b) Cement.

(c) Felt of all types.

(d) Blocks.

(e) Slates.

(f) Roofing tiles.

(g) Copper, sewer and plastic piping.

(h) Household paint.

(5) Fuel, oil, coal, turf, and briquettes.

(6) Seed, grain and grass seed and further for the purpose of ensuring that the covenant hereinbefore contained shall continue to bind the premises hereby assured, that the purchasers their personal representatives and assigns shall upon every Conveyance, Lease or assurance of the same premises or any part thereof give to the Purchaser, Grantee or Lessee express notice of such covenants but so that the Purchasers or their personal representatives shall not and on compliance with the last mentioned covenant and on Conveyance or Lease or other assurance or the entire of the premises hereby assured continue to be liable for any breach of the restrictions of user hereinbefore contained by any Purchaser, Grantee or Lessee from the said Purchasers and notice of every purchase, grant or lessee shall be notified to the Vendors herein and their Solicitors for the

time being.

5. The Authority considers that Mitchelstown was and its successor, Dairygold, and Conor O'Brien are undertakings and that the notified agreement is an agreement between undertakings. The agreement has effect within the State.

6. As the sale of the premises was completed prior to 1 October 1991, the date the Competition Act came into force, that element of the agreement was discharged by performance before the Act came into force. The property that was the subject of the agreement has been transferred. In the Authority's view, the prohibition under Section 4(1) only applies to a current or continuing contractual commitment or one entered into subsequent to the coming into force of the Act. As the sale element of the 1986 transaction was discharged prior to the commencement of the Act, that aspect of the arrangements does not come within the scope of Section 4(1).

7. The agreement also contains continuing contractual obligations or commitments in relation to the occupation of the premises which are designed to prevent the use of the premises for the sale of agricultural inputs, builders providers goods and fuels. In the Authority's opinion, the inclusion of restrictive and exclusive user clauses in agreements for the sale of a particular premises cannot be regarded as preventing, restricting, or distorting competition within the State or any part of it. The purchaser acquired the premises for the purpose of his business, i.e. as a veterinary surgery, and for development as shops. If the purchaser seeks to enter the business of sale of agricultural inputs, builders hardware or fuel he is free to do so at other premises 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 by the agreement 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.

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 Mitchelstown Co-operative Agricultural Society Ltd (now Dairygold Co-operative Society Ltd) and Conor and Annabella O'Brien in relation to the sale of premises at Mill Street, Fermoy, Co. Cork notified under Section 7 on 30 September, 1992 (notification no. CA/722/92E), does not offend against Section 4(1) of the Competition Act, 1991.

For the Competition Authority

Des Wall

Member

23 June 1994