As a landlord, tenant or other landowner, what do I need to do in the light of the UK government repealing the Land Agreements Exclusion Order?

The UK government has decided to revoke the Land Agreements Exclusion Order. This means that from 6 April 2011 land agreements will need to comply with Chapter I of the Competition Act 1998. As of that date, all companies, including developers and landowners, must self assess land agreements for compatibility with competition law to ensure they do not result in a breach of the Chapter I prohibition.

For the purpose of the Competition Act land agreements are agreements which create, alter, transfer or terminate interests in land. This definition includes the grant of leases and underleases, assignments of leasehold and transfers of freehold land as well as the creation and disposition of an easement, servitude and even a licence.

Chapter I of the Competition Act prohibits agreements between undertakings which may affect trade within the UK and which have as their object or effect the prevention, restriction or distortion of competition within the UK. Compliance with Chapter I is enforced by the OFT, who may conduct an investigation, impose measures to halt the anti-competitive behaviour or impose a fine.

Property arrangements, such as a retail lease in a shopping centre containing a provision whereby a landlord agrees not to grant a lease of other units to a competitor, tenant’s restrictions on alienation and use and restrictive covenants may all be caught under Chapter I. In practice, most of the land agreements will probably fall outside the prohibitions imposed by Chapter I, however, the onus will be on each business to analyse their land agreements to ensure compliance. The OFT has promised to publish further detailed guidelines to assist businesses in their self assessment.

The revocation of the order will be effective from 6 April 2011 to give businesses sufficient time to review their existing agreements to ensure compliance with competition law.