Guidance

Land agreements and competition: dos and don’ts

Published 25 October 2018

© Crown copyright 2018

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Land agreements business advice

Many UK businesses operate from property under some form of land agreement. Land agreements must comply with competition law. They can include agreements for the sale or lease of land and those regarding the use of or access to land.

If a land agreement breaks competition law, all businesses involved (for example, both the landlord and tenant) are potentially at risk of:

  • fines of up to 10% of worldwide annual turnover
  • disqualification of a director for up to 15 years
  • claims for damages
  • significant reputational damage
  • the land agreement or the restrictions being unenforceable

Recently, the CMA fined Heathrow Airport £1.6 million for having breached competition law by including a pricing restriction in a lease agreement with a hotel.

Don’t make similar mistakes: regularly check that your land agreements are compliant with the law.

Not all restrictions will break competition law. There are many valid reasons why a business may put in place or agree to restrictions which affect or limit the way in which land may be used, or how a right over land may be exercised.

It’s important to be clear on what you can and can’t do and if in doubt, seek legal advice.

Below is a check list to consider if your business operates under an existing land agreement or if you are considering entering into one.

Do:

  • familiarise yourself with competition rules. To find out more about competition law and how it can affect your business, see our competition guidance page

  • amend any non-compliant agreements

  • regularly review land agreements to ensure they remain compliant with the law

  • set up a competition law compliance programme to manage and mitigate competition law risks

  • enter into a land agreement which restricts the prices at which goods or services can be supplied at from the land

  • enter into a land agreement which restricts how the land can be used with the aim of sharing or dividing up territories or customers

  • enter into land agreements which restrict how the land can be used to make it harder for other businesses to compete

  • assume existing land agreements are legal because they have been checked by lawyers in the past. The law changed in 2011 so that land agreements (particularly use restrictions) were no longer exempt from competition law– see the CMA’s detailed guidance on land agreements

If you think that you or your business may have been involved in an anti-competitive agreement, you can notify the CMA, or contact us on 0203 738 6000. You may even benefit from lenient treatment by being the first to come forward to the CMA.

This note is intended to flag key issues that arise in the context of potentially anti-competitive land agreements. Other restrictions may also breach competition law. Land agreements may also contain restrictions which amount to abusive conduct where one or more parties hold a dominant market position. This note is not intended to cover land arrangements in specialist sectors, for example, supermarkets.

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