Guideline on the application of competition law to land agreements

Start date: March 2010

Close date: 24 March 2011

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Update - 24 March

On 24 March 2011 the OFT published its guideline on the application of competition law following the revocation of the Land Agreements Exclusion Order (pdf 561kb) (the guideline).

The guideline sets out a framework for assessing agreements that restrict the way in which land may be used, or how a right over land may be exercised, in the light of the law prohibiting anticompetitive agreements in the UK.

The OFT has also published a quick guide to land agreements and competition law (the quick guide) and a summary of responses (pdf 348kb) to the OFT public consultation on draft guidance on the application of competition law to land agreements, which took place between 15 October 2010 and 14 January 2011.

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Summary

Land agreements are, for the purposes of the guideline and the quick guide, agreements between businesses which create, alter, transfer or terminate an interest in land. This includes, amongst others, situations where two businesses enter into a lease agreement, or where one business sells property to another business.

Parties to land agreements may impose a restriction on the way in which land may be used, or how a right over land may be exercised. The guideline focuses on these restrictions.

There are many legitimate reasons why the parties to a land agreement may impose or agree to restrictions regarding the use of land. The OFT expects that only a minority of such restrictions will infringe competition law. The guideline and the quick guide set out the types of land agreements are more likely to restrict competition.

Agreements that restrict competition are prohibited by UK and EU competition law. They are generally unenforceable and the parties to a prohibited agreement may be susceptible to damages claims before the UK courts.

The parties to a prohibited agreement may also face enforcement action by the OFT or (in certain cases) a sectoral regulator, who have the power to impose financial penalties and direct parties to bring an infringement to an end. Anti-competitive agreements are generally unenforceable and the parties to a prohibited agreement may be susceptible to damages claims before the UK courts.

Apart from restrictions regarding the use of land that are agreed to between competitors and that lead to market-sharing and in certain other exceptional circumstances, the OFT is unlikely to take further action in respect of a land agreement where none of the parties to the agreement has a market share exceeding 30 per cent on the relevant market where the land is used. This is explained further in chapter 8 of the guideline.

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Background

Up to 6 April 2011, the Competition Act 1998 (Land Agreements Exclusion and Revocation) Order 2004 (the LAEO) excluded land agreements from Chapter I of the Competition Act 1998 (this is the UK law prohibiting anticompetitive agreements). The LAEO did not exclude land agreements from EU competition law or from the rules on abuse of dominance.

Following the Competition Commission's April 2008 report into the supply of groceries and a public consultation, the UK Government decided (following a public consultation)  that the LAEO would be repealed, with effect from 6 April 2011.

The OFT has made the guideline on the application of competition law to land agreements in order to assist business in assessing land agreements following the revocation of the LAEO.

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Related documents

• Guideline on the application of competition law following the revocation of the Land Agreements Exclusion Order (pdf 561kb) 
• Quick guide to land agreements and competition law
• Questions and answers
• Summary of responses (pdf 348kb)
• Consultation document: Land Agreements - Guidance on the application of competition law following the revocation of the Land Agreements Exclusion Order (pdf 479kb)
• Press release OFT publishes final land agreements guideline (24 March 2011)
• Press release OFT provides guidance on land agreements following change in law (15 October 2010) 

Individual responses to the consultation are avaiable on the Consultation page.

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Team leader

Carlos Martínez Rico (020 7211 5839, carlos.martinez@oft.gsi.gov.uk)

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Project director

Bethan Watts (020 7211 8564, bethan.watts@oft.gsi.gov.uk)

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Senior responsible officers

Graham Winton (020 7211 8504, graham.winton@oft.gsi.gov.uk)
Cavendish Elithorn (020 7211 8170, cavendish.elithorn@oft.gsi.gov.uk)

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Media enquiries

Any media enquiries should be directed to a member of our Press Office.

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