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 Power Supermarkets Ltd and Richard and Susan Whyte.

2. The notification concerns an agreement relating to the sale of premises containing 9 shop units at 12 Austin Friar's Street, Mullingar, Co. Westmeath between Power Supermarkets Ltd as the vendor and Richard and Susan Whyte as purchasers.

3. Power Supermarkets Ltd is engaged in the supermarket business with a large number of outlets throughout the State. It operates a supermarket at Fairgreen, Mullingar, which is approximately one half mile distance from the premises sold. Richard & Susan Whyte are the landlords of, and are engaged in the letting of a number of shop units at, 12 Austin Friar's Street, Mullingar, Co. Westmeath.

4. The notified agreement which was executed on 24 September, 1989, provides for the sale of the premises by Power Supermarkets Ltd to Richard and Susan Whyte for a substantial consideration. Under the agreement the Purchasers covenant to keep the vendor indemnified against any breaches of earlier agreements between the vendor and a number of previous owners of part of the properties involved. The agreement also contains the following covenant on the part of the purchasers:-

" The Purchasers hereby for themselves and their Assigns covenant and each of them hereby for himself and his assigns covenants separately with the Vendor not without the prior consent in writing of the Vendor to grant convey assign lease or let or permit to be granted conveyed assigned lease let subleased or sublet or suffer or permit to be used or occupied any shop or unit in the property sold as a retail shopping outlet with an area containing or totalling more than 2,500 square feet."

5. The Authority considers that Power Supermarkets Limited and Richard & Susan Whyte are undertakings and that the notified sale 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 was discharged prior to the commencement of the Act, that aspect of the arrangements does not come within the scope of Section 4(1). In any event the Authority would not consider the sale, per se, of a property as raising any issues under the Competition Act.

7. The sale agreement contains a continuing contractual commitment on the part of the purchasers and their assigns in that they have covenanted not to allow any part of the property sold to be used as a retail shopping outlet with an area totalling more than 2,500 square feet without first obtaining the consent of the Vendor.

8. In the Authority's opinion the inclusion of restrictive user clauses in agreements for the sale of a particular property cannot normally be regarded as preventing, restricting or distorting competition within the State or any part of the State. The purchasers acquired the property, which was laid out as 9 shop units for a particular purpose i.e., the letting of smaller shop units. If the purchasers wished to acquire properties which could be used as retail units in excess of 2,500 square feet, they were free to do so elsewhere in the town of Mullingar, subject to the grant of planning permission. Similarly any other undertaking, wishing to compete with either the vendor (whose nearest place of business is one half mile away) or with the purchaser is not restricted by the agreement from doing so in the vicinity. The Authority therefore considers that the notified agreement between Power Supermarkets Ltd and Richard and Susan Whyte 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 Power Supermarkets Ltd and Richard and Susan Whyte in relation to the sale of premises at 12 Austin Friar's Street, Mullingar, Co. Westmeath notified under Section 7 on 30 September, 1992 (notification no. CA/1115/92E), does not offend against Section 4(1) of the Competition Act,1991.

For The Competition Authority

Des Wall

Member

21 November 1994.