On 29th June, the Government formally revoked the Land Agreement Exclusion Order.
This revocation will not come into force until 6 April 2011 which means that the real estate industry has some further 10 months to assess the implications and to ensure compliance with the Competition Act.
The abolition of the Order means that the exemption, which the real estate sector had for land agreements will no longer exist. They will now be treated in the same way as any other commercial agreement and will be subject to the prohibition in the 1998 Act, which applies where an agreement affects competition and trade in the UK.
Most land related agreements do not affect competition and therefore the revocation will have no practical significance. However, there are a number of obligations which may be entered into between landlords and tenants and adjoining landowners, which may potentially be anti-competitive. Take for example the landlord agreeing at the insistence of a retailer in a shopping centre that the landlord will not allow any competing occupiers in order to protect the retailer’s business.
The OFT has promised high-level guidance on land agreements going forward. So far, the draft guidance has yet to be published. There is no indication as to when the draft may be available for public consultation. All that the OFT have said so far is that the guidance will be finished for 6th April 2011 which means the draft will need to be issued by the end of this year at the latest.
In the meantime, those occupiers (particularly in the retail and leisure sectors) who routinely insist upon exclusivity covenants (as well as other parts of the real estate sector who impose obligations which may be regarded as anti-competitive) should start to review what action they may need to take.
