Notification No: CA/607/92E ‑ Richfield Investments Ltd/ Five Star Supermarket

Decision No:  252

Introduction

1.	Notification was made by Five Star Supermarket on 30 September, l992 with a request for a certificate under Section 4(4) of the Competition Act, l99l or, in the event of a refusal by the Competition Authority to issue a certificate, a licence under Section 4(2) in respect of leases between Richfield Investments Ltd and Five Star Supermarket.

The Facts

(a)	Subject of the notification

2.	The notification concerns the leases of adjoining units i.e. the superstore unit and units C and D at the Thomond Shopping Centre (previously described as Ashbourne Shopping Centre), Roxboro, Limerick between Richfield Investments Ltd as landlord and Five Star Supermarket as tenant.

(b)	The parties involved

3.	Richfield Investments Ltd is the owner and landlord of the Thomond Shopping Centre,Roxboro, Limerick.  Five Star Supermarket trades as a supermarket and Home Improvement/DIY store at the centre.

(c)	The notified arrangements

4.	2 leases were notified. The lease for the superstore unit was executed on 12 November 1973 for a term of 42 years from 1 November 1973. The restricted user clauses in the lease are as follows:

(a)	Under clause C(12) the tenant covenants "To use the demised premises only for the carrying on of the trade, provision of the services or sale by retail of the goods set out in the Fourth Schedule hereto and not without the Landlord's consent in writing to use or permit to suffer the same or any part thereof to be used for the carrying on of any other trade, provision of any other service or the sale of any other goods or for any other purpose whatever..."

(b)	Under clause c (14) the tenant covenants "(a)  Not to assign, sub‑let, part with or share possession or occupation of the demised premises or any part thereof or suffer any person to occupy or use the demised premises or any part thereof as Licensee with the consent in writing of the Landlord being first obtained."

(c)	Under clause 4 of the Landlord covenants " The Landlord shall not permit any other supermarket to operate at the Ashbourne Centre and shall not permit the sale of food in any other premises in the Centre except in Unit shops of not more than 2,000 square feet dealing in specialised food trades and that the sale of liquor for consumption off the premises shall not be permitted in any other premises in centre except the public house premises and as may otherwise be agreed between the Landlord and the Tenant." 

(e)	In the Fourth Schedule, the Limitation of User Clause states "The premises shall be used as a Supermarket and/or for the sale of alcoholic beverages for consumption off the premises."

In addition, there are a number of other standard restrictive covenants and obligations in the lease.

5.	The lease in relation to units C and D was executed on 26 May 1983 for a term of 35 years from 24 June 1979.  The restricted user clauses in this lease are as follows:‑

(a)	Under clause 4(25) the tenant covenants "....to ...use and occupy the demised unit only for the carrying on of the trade provision of the service or sale by retail of the goods set out in the Fourth Schedule hereto ....." with the Limitation of user clause in the Fourth Schedule being defined as "Home Improvement and Do‑It Yourself store and Garden Store and ancillary business as carried out by the Tenant, together with the right to serve for sale or otherwise, tea, coffee, minerals, biscuits and pastries."

(b)	Under clause 4(23) the tenant covenants "Not to assign....possession or occupation of the demised unit or any part thereof....without the consent in writing of the Landlord....."

(c)	Under clause 4(50) the tenant covenants "Not without the prior written consent of the Landlord to use...the demised unit for the sale or supply of beer, wine spirituous or other intoxicating liquor..."

(d)	Under clause 5 the Landlord covenants ".....not to let or consent to any assignment ....to any of the other units ...in the Thomond Shopping Centre or in any way permit a user of another such unit which would in any way materially conflict or compete excessively with the trade or business of the tenant."

In addition there are a number of other standard restrictive covenants and obligations in the lease.

Assessment ‑ The Applicability of Section 4(1)

6.	The Authority considers that Richfield Investments Ltd and Five Star Supermarket are undertakings and that the notified leases are agreements between undertakings.  The agreements have effect within the State.

7.	The Authority considers that the notified agreements, and their restricted and exclusive user clauses and the other standard restrictive clauses and obligations, do not have the object or effect of preventing, restricting or distorting competition in trade in any goods or services in the State or in any part of the State, for the reasons given in the Notice of the Authority of 2 September, l993 in respect of shopping centre leases (Iris Oifigiuil of 10 September, l993, pp. 665‑667).  The Authority therefore considers that the notified agreements between Richfield Investments Ltd and Five Star Supermarket do not offend against Section 4(1) of the Competition Act, l99l.

The Certificate

8.	The Competition Authority has issued the following certificate:

The Competition Authority certifies that in its opinion, on the basis of the facts in its possession, the agreements between Richfield Investments Ltd and Five Star Supermarket in relation to the lease of the premises at the Thomond Centre, Roxboro, Limerick, notified under Section 7 on 30 September, l992 (notification no. CA/607/92E), do not offend against Section 4(1) of the Competition Act, l99l.

For the Competition Authority

Des Wall
Member
15 December 1993