Land Agreements Order

Chapter I of the Competition Act 1998 prohibits companies from entering into anti competitive agreements. The Competition Act 1998 (Land Agreements Exclusion and Revocation Order) 2004 (the "Order") excludes land agreements from these provisions, but this will be repealed on 6th April 2010 with effect from 6 April 2011. The exclusion for land agreements was based on the premise that most agreements relating to land do not raise competition issues. However, the government has decided that following the modernisation of competition law which requires parties to self-assess agreements for their compatibility with competition law, there is no reason why land agreements should be excluded from the regime.

The reason for excluding land agreements was also a practical one to provide certainty about how the Competition Act would apply to the very large number of agreements that concern land, the vast majority of which are not likely to result in negative impacts on competition in markets and are, therefore, of no concern to the Office of Fair Trading (OFT). The Order provided certainty that a land agreement would be legally enforceable unless and until such time as they were specifically examined and found to be anti-competitive. This meant it was not necessary for parties to land agreements to notify them to the OFT for clearance.

However, concern was expressed at the time by the property industry as to how the new prohibition would apply to agreements relating to property: in particular to agreements that place restrictions on the use of outlets in shopping centres and retail parks. This concern was underpinned by the novelty, in the property industry's view, of property being made subject to competition law. Previously, the Fair Trading Act 1973 had applied only to goods and services and therefore had not applied to property since land is neither a good nor a service. And following the 1978 decision of the Restrictive Trade Practices Court in the Ravenseft case, it was believed that the great majority of commercial leases were excluded from competition law. There was also a general perception that, with limited and well known exceptions (such as the beer tie and petrol distribution agreements), European law would not apply to land agreements since any restrictive provisions they may contain were not liable to affect trade between Member states. However, under the new Competition Act 1998, the Chapter I prohibition applied to any agreement that...

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