Am I able to restrict my landlord from letting adjoining units to competitors?
From last month, the aspects of UK law prohibiting agreements that restrict competition applied in full to property transactions. The change is retrospective and affects existing leases as well as future deals.
Exclusivity has historically been a prime concern for some retailers that have negotiated agreements with landlords not to grant leases of neighbouring premises to their competitors – particularly in shopping centres or on retail parks.
Jane Weaver, a partner in the property team at law firm Walker Morris, explains that agreements will now need to be reviewed to assess whether it offends the competition rules. “In simple terms, an agreement will be anti-competitive if it prevents, restricts or distorts competition to an appreciable extent,” she says. However, even if technically it is anti-competitive, the agreement can be “exempted from the prohibition if the parties can show that it brings economic and consumer benefits, and that the restrictions are necessary to achieve those benefits”, adds Weaver.
An agreement that breaches the prohibition will automatically be void and unenforceable. “Third parties affected by an unlawful provision can take legal action to obtain an injunction or declaration against the restrictive provision and/or damages for any losses suffered,” says Weaver. She adds that The Office of Fair Trading has the power to investigate alleged breaches of the prohibition, terminate or modify the anti-competitive provisions. There is also the potential to impose substantial fines.
In light of the changes to this law, retailers should review their portfolio to establish whether they have the benefit of any exclusivity agreements and, if so, whether they are potentially anti-competitive and therefore unenforceable.Am I able to restrict my landlord from letting adjoining units to competitors?
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