In April, we discussed the first reported case on the application of the UK competition rules to land agreements (Martin Retail Group Ltd v Crawley Borough Council). In that case the Central London County Court struck down a proposed restriction which would have prevented the sale of groceries, fresh food, beer, wine, spirits and other household products by Martin Retail (best known as a newsagents and tobacconist).
The Council, which sought to impose the restrictions, conceded that they would restrict competition, but argued that the local community benefitted from the range of traders and retail outlets in the shopping parade and claimed that smaller businesses would be less likely to take a lease of premises in a parade where their trade was not protected, i.e. there were countervailing benefits which outweighed the anticompetitive effects.
The Court was not satisfied that the distribution of goods was improved, or economic progress promoted, through the existence of a number of different retailers rather than via a supermarket or a number of similar retailers. The proposed restriction clearly provided a means of eliminating competition in convenience goods on the parade.
On that basis, the judge agreed with the tenant that the proposed restriction would unlawfully eliminate competition in convenience goods in the parade.
Now the EU's highest court, the Court of Justice of the EU, is to review restrictions on use included in property leases to determine whether they comply with antitrust rules. The Latvian retail chain Maxima entered into leases which restricted lessors from leasing space to Maxima's competitors. Maxima was fined by the Latvian authorities for breaching the antitrust rules. On appeal, the Latvian Supreme Court referred to the Court of Justice questions concerning whether such a restriction should be assessed as an 'object' restriction, or whether its effects would need to be taken into account.
If such restrictions were to be classed as 'object' restrictions, this could have significant implications for the commercial property sector.