Irish Competition Authority Decisions

1. Notification was made by Wanze Properties (Ireland) Ltd (Wanze) 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 Wanze and FAS.

2. The notification concerns the lease relating to premises, originally described as Twilfit House, located between 137/140 Upper Abbey Street, 1/4 Stafford Street and 57/60 Jervis Street, Dublin 1 between Wanze as lessor and FAS as lessee.

3. Wanze, as successor in title, is the landlord and owner of the Twilfit House premises and is engaged in the letting of properties at several locations in the State. FAS is the successor to the former lessee of the premises. FAS (Foras Aiseanna Saothair) is the State Training and Employment Authority. Its accounts for 1992 show a total income of £226m of which £215m was derived from EU Community and Exchequer grants. Miscellaneous income included £1.15m from sponsored trainees and £2.98m sundry income including fees for evening courses, interest and other income. FAS International Consulting Ltd, a wholly owned subsidiary of FAS, is engaged in the marketing of training services abroad.

4. The notified lease was executed on 1 August 1974 between Leethams (Ireland) Ltd and Carr & McDonnell Ltd for a term of 35 years from 1 August 1974. The lease contains the following restricted user clause viz.:

"(15) Not without the consent in writing of the Lessor to use or suffer the demised premises or any part thereof to be used for residential purposes or for any purpose other than for manufacturing, for offices, display and merchandising."

In addition there are a number of other standard restrictive covenants and obligations in the lease including a restriction on the lessee of any assignment of possession or permitting any sub-letting of the premises without the consent of the lessor, which consent shall not be unreasonably withheld.

5. Section 4(1) of the Competition Act, 1991 prohibits and renders void all agreements between undertakings, decisions by associations of undertakings and concerted practices which have as their object or effect the prevention, restriction or distortion of competition in trade in any goods or services in the State, or in any part of the State.

6. The term "undertaking" is defined in Section 3(1) of the Act, as "a person being an individual, a body corporate or an unincorporated body of persons engaged for gain in the production, supply or distribution of goods or the provision of a service". Wanze is engaged for gain in the letting of premises and is therefore an undertaking. While the main activities of Fas are State funded, Fas is also engaged in the provision of training services for which it derives an income from fees. The Authority therefore regards Fas as an undertaking engaged for gain. The notified lease is an agreement between undertakings. The lease agreement has effect within the State.

7. The lease agreement contains standard restrictions and obligations on both the lessor and lessee 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. Anyone wishing to operate a business in competition with the tenant may do so by occupying any other premises within the State.

8. In addition the agreement also provides, by way of the permitted user clause 15, restrictions on the use of the premises. As the tenant may use the premises virtually for any purpose other than residential there is no question of any restriction of competition. The Authority therefore considers that the notified agreement between Wanze Properties (Ireland) Ltd and FAS 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 Wanze Properties (Ireland) Ltd and FAS in relation to the lease of premises at Twilfit House, 57/60 Jervis Street, Dublin 1 notified under Section 7 on 30 September, 1992 (notification no. CA/913/92E), does not offend against Section 4(1) of the Competition Act, 1991.

For The Competition Authority

Des Wall

Member

12 October, 1994.