The Competition Authority has been reluctant to apply competition law to restrictions on the use of the property. However, it is clear that competition law is potentially applicable to restrictions on the use of land.
Restrictions are commonly imposed in shopping centre leases on the use of units. In many of its notifications under the Competition Act 1991, the Competition Authority concluded that the agreements did not prevent or restrict competition in the State or part of the State.
Typically, it has taken the view that restrictions applied in respect of a particular property did not represent a not a significant distortion of competition because the business could be undertaken from other properties.
This approach may be somewhat theoretical in some cases. There may be a limited supply of property available from a planning or physical infrastructure perspective in a given area. The effect of restricting a small number of properties may be to restrict trade and competition in a significant area.
Leases & Tenant Mix
Landlord and Tenant legislation provides that a tenant may apply for a change of use and that the landlord may not unreasonably withhold consent. Clauses may provide that certain changes of use are deemed impermissible. In tandem, the shopping centre developer may grant exclusivity to tenants for particular uses. In some markets, significant sums may be paid by the purchaser for exclusivity.
Restrictions in leases typically also restrain the tenant from assigning or transferring its lease or subletting without the landlord\’s consent. In principle, a landlord could refuse consent in a manner that is restrictive of trade and business. This may apply even if the incoming tenant does not require a change of use.
The issues of consent to assignment and change of use will commonly arise in tandem. The Landlord and Tenants Act provide that both in respect of change of use and assignment, the landlord may not unreasonably withhold consent. In some instances, the refusal of an application for change if use and /or assignment may have an anticompetitive effect in that a particular assignee is kept out of a shopping centre that might otherwise provide competition or further competition.
Shopping centres typically provide a mix of tenant types and uses. Each lease typically has a particular permitted use.
The Competition Authority issued a notice under the 1991 Act in respect of shopping centres. Its view was that the most commonly encountered clauses in leases would not generally restrict competition, provided that they related to the proper operation of the centre.
They have generally been willing to uphold exclusive uses in respect of particular units in the interests of tenant mix. The object of a balanced range of outlets in the centre, will generally be legitimate.
Facility / Infrastructure
The exclusive right to use a particular facility, of which there is restricted supply, may constitute a restriction of competition. It may be upheld if it is objectively justifiable.
Where dominant undertaking control and owns a particular facility or infrastructure to which competitors need access in order to provide services, it may be prohibited from refusing access or offering access only on terms that on unfavourable terms.
Competition law applies to the banking, insurance and other financial services sector in the normal way. The financial services sector is heavily regulated. Competition is not a significant feature of the regulation.
The fixing of interest rates by competitor banks in effect, comprises price-fixing. Agreements on interest paid or charged are almost inevitably unlawful. Agreements on bank charges are equally unlawful.
The banking sector tends to have a relatively small number of market participants. Accordingly, arrangements and agreements between the banks are suspect and subject to scrutiny. They must be justified on objective grounds. The EU Commission has decided that agreements on opening hours will not generally breach competition law.
Banks operate payment systems, which have significant cooperation. Payment systems must not incorporate arrangements and practices in breach of competition law. The rules of the principal payment systems were notified to and examined by the Competition Authority under the 1991 Act. Certain rules were found to be anti-competitive and were required to be amended.
Credit card payment systems involve networks of agreements between issuers, businesses and financial institutions. The rules of various systems were notified to the Competition Authority, and some provisions of the agreement were found invalid and required modification.
Certain practices, characteristic of the insurance sector, required modification under competition law. Tying arrangements by which customers were required to take out insurance through a particular broker have been found invalid.
The Competition Authority has objected to the exchange of price information between insurance companies in relation to particular types of risks. Similarly, recommendations of insurance companies have been found to contravene EU competition law.
Common risk premium tariffs may be permitted, subject to conditions. Statistical cooperation based on historical data may be permitted.
Agreements between insurance companies and brokers in respect of commission have been required to be amended. Agreements between insurance companies, setting maximum commissions payable to intermediaries reached under the auspices of a trade body, were found to breach competition legislation.
They could not be justified in terms of the corresponding benefit, which the agreement has alleged to facilitate.
Share subscription agreements commonly contain restrictions on the participant conducting business other than through the company concerned for a certain period. These are generally acceptable during the course of the operation of the company’s venture or trade.
Similar principles apply in the course of a joint venture. Some types of restrictions arising in the course of the joint venture may be invalid.
Restrictions after the termination of the arrangement are more likely to contravene competition legislation. They may be upheld only to the extent that they are objectively necessary to protect a legitimate interest. Restrictions applicable after termination of the conduct of trade are less likely to be valid.
Formerly, the securities industries were largely self-regulated under private rules. Many such rules were found to be anticompetitive and were required to be removed after the enactment of the Competition Act.
Certain elements of the Irish Stock Exchange rules relating to price setting and restrictions on the roles that certain parties could play were found objectionable and were required to be amended by the Competition Authority.
Many professional services are regulated by statute. It is unlawful to practice a range of professions and businesses without licensing.
The requirement for licensing in itself is not contrary to competition law. However, price fixing by professional bodies, restrictions on entry and certain other practices are likely to breach competition law.
Recommended fees or minimum fees are likely to be invalid.