When negotiating a lease, its effect on competition may not be at the forefront of most landlords’ or tenants’ minds, but a case currently before the Competition Appeals Tribunal (CAT) serves as a reminder of the application of competition law to property agreements.
The Competition Act 1998, which incorporated EU competition rules into UK law, prohibits certain agreements between businesses which prevent or restrict competition or which involve the abuse of a dominant market position. Since 2011, the Act has applied to land agreements, including leases (which had previously been exempt).
The rules seek to strike a balance between, on the one hand, protecting businesses and consumers from anti-competitive practice and, on the other, recognising that there are many legitimate reasons why a landlord, for example, might want to limit the way in which its property is used.
The Prinknash Bird and Deer Park was established in the 1970s on land within the grounds of Prinknash Abbey, a Benedictine monastery in rural Gloucestershire. The current lease, between the Abbey and the Bird Park, was agreed in 2011.
In 2013, the parties were in litigation, before the High Court, concerning (among other things) the meaning of the user clause in the lease. That litigation was settled on terms in which the parties agreed, in considerable detail, the use that the Bird Park was permitted to make of the land.
In February 2019, the Bird Park issued a competition claim against the Abbey before the CAT. It seeks to overturn the settlement it had previously agreed and instead to widen its use of the Bird Park site, to include establishing a café, expanding the retail offering in its gift shop, and holding a wide range of events (including some, such as Halloween, which offend the Abbey’s religious beliefs).
The potential implications of the case, for landlords and tenants, are significant. If successful, the claim could limit a landlord’s ability to define and prescribe the use that a tenant may make of particular premises. Landlords may be hesitant to let out premises, particularly in sensitive locations (such as heritage or religious sites), if they are unable to control how the premises will be used. While the property in question – a bird park in the grounds of an abbey – is unusual, the principles could equally apply to, for example, leases for units in shopping centres where a landlord is seeking to promote a particular mix of retail offerings.
Loxley act for Prinknash Abbey, the landlord. The case is due to be heard by the CAT in the week of 15 July 2019. It is being dealt with under the CAT’s “fast-track” procedure and will be only the second case to be tried in this way (the first being Socrates v. The Law Societyin 2016). The procedure is intended to make competition proceedings more accessible for SME businesses, by requiring a hearing within 6 months of issue and by fixing a cap on legal costs.
Details of the case are published on the CAT’s website: https://www.catribunal.org.uk/cases/13035719-melanie-meigh-trading-prinknash-bird-and-deer-park
For more information, please contact Fred Harrison-James or Bryony Darnell.