How does the Competition Act 1998 affect your property?

The Problem
The Act which came into force on 1st March 2000.

The Law
The Competition Act 1998 prohibits both anti-competitive agreements and, quite separately, the abuse of a dominant commercial position. If the Act is breached the Office of Fair Trading has the power to impose a fine of up to 30% of a companyís turnover.

Solution
Do not breach the Act! The Competition Act 1998 (Land and Vertical Agreements Exclusion) Order 2000 helps. This Order excludes from the restrictions against anti-competitive behavior an agreement which creates changes or terminates an interest in land. As a general rule this exclusion covers the transfer of land and the granting of leases. It will not help if unusual or non-standard conditions are buried in leases or transfers of land. Such conditions will only enjoy the benefits of these exclusions if, for example, in a lease the anti-competitive obligations relate to the parties to the lease in their capacity as Landlord and Tenant but not in any other respect. Will an oil company Landlord still be able to require its tenant to buy only its petrol? What about an Insurance Company Landlord who wants to force its tenant to insure the building only with its own policies.

Landlords must in particular be careful of the following:

1. A town centre management agreement containing clauses which restrict, for example the opening hours of shops
2. Building contractors agreements. These may relate to works on land but they do not enjoy the benefit of the exclusions
3. Funding agreements

Remember in particular that the Exclusion Order where it applies excludes from the Act anti-competitive agreements. It does not exclude abuse of a dominant position. If Tenants feel that this is all for their benefit they may need to think again. Any large anchor Tenant with the commercial clout to affect the market may find itself in trouble if it uses this market power to abuse its dominant position.