COMPETITION AUTHORITY

Competition Authority Decision of 4 February 1994 relating to a proceeding under Section 4 of the Competition Act, 1991.

Notification No. CA/609/92E - Leonard Ging and Henry J. Lyons/Five Star Supermarket/Tenants at Drumcondra Road.

Decision No. 280.

							

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Notification No:  CA/609/92E - Leonard Ging and Henry J Lyons/Five Star Supermarket Tenants at Upper Drumcondra Road

Decision No: 280

Introduction

1.	Notification was made by Five Star Supermarket on 30 September, 1992 with a request for a certificate under Section 4(4) of the Competition Act, 1991 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 relating to premises at 20/24 Upper Drumcondra Road.

The Facts

(a)	Subject of the notification

2.	The notification concerns leases relating to the site of the former Drumcondra Grand Cinema, Drumcondra Road, Dublin 9 between Leonard Ging and Henry J Lyons as Superior Landlords, Five Star Supermarket as tenant and landlord and the tenants of 2 shops.

(b)	The parties involved

3.	Messrs Ging and Lyons were the original lessors of the site.  Five Star Supermarket as successor to the Drumcondra Grand Cinema Ltd are engaged in the business of supermarket.  The tenants of the shop units are engaged in retail/service activities.

(c)	The notified arrangements

4.	The following leases were notified viz.

(i)	Lease dated 28 February 1934 between Messrs Ging and Lyons as landlords and Drumcondra Grand Cinema Ltd as tenant.  The lease has a term of 419.5 years from 1 May 1933.  Under clause 7 of the lease the lessee covenants "That the lessee .... will use and occupy the said messuage as a Theatre and for shops only and will not at any time without the consent of the Lessors use the same or any portion thereof as a tenement house or tenement houses or for any other purpose ......."

(ii)	Lease dated 21 October 1936 between Drumcondra Grand Cinema Ltd as Lessor and Michael McInerney as lessee for a term of 300 years from 1 November 1935.  Under clause 5 the lessee covenants that he " .... will not use and occupy the said messuage without the consent of the Lessor, or any portion thereof as a tenement house or tenement houses ......" while under clause 8 he covenants that he " .... will not carry on or permit upon the said premises or any part thereof any .... dangerous trade business manufacture or occupation .... nor use the same nor allow the same to be used for the carrying on therein of the businesses or trades of victualler in all its branches and Pork Butcher or for the sale of Fish and Chips ......."

(iii)	Lease dated 2 May 1936 between Drumcondra Grand Cinema Ltd and Eileen White as lessee also has a term of 300 years and contains provisions similar to the lease dated 21 October 1936 at (ii) above.
In addition, there are a number of other standard restrictive covenants and obligations in the leases.

Assessment - The Applicability of Section 4(1)

5.	The Authority considers that at the time the leases were executed the parties thereto were undertakings.  The provisions of the leases continue to apply to their successors.  Five Star Supermarket and the current tenants are undertakings and the agreements notified are agreements between undertakings.

6.	The Lease agreements contain standard restrictions and obligations on both landlord and tenant which are necessary for the maintenance of the landlord/tenant relationship in respect of the tenancies.  These do not raise issues under the Competition Act.  In addition each agreement also provides for minor restrictions on the use of each premises i.e. their use as tenement houses and in the case of the 2 shop units, their use as a victualler Pork Butcher or Fish and Chip shop.

7.	The very act of leasing the premises to a particular tenant prevents competitors of the tenant from using those premises to compete with the tenant.  Clearly this cannot be regarded as preventing, restricting or distorting competition since it would imply that the leasing of a commercial premises in order to carry on a business therein was prohibited unless licensed under section 4 (2) of the Competition Act.  Anyone wishing to operate a business in competition with the tenants may do so by occupying any other premises within the same catchment area.  The tenants of the shop unit are prevented from operating certain businesses which might compete with those operating in nearby premises.  Again such a restriction would not prevent the tenant or anyone else from operating such a business from another premises within the same catchment area.  In any event the current tenants have the permitted user they require for their current businesses.  If they were to seek a change of user this is governed by the Landlord and Tenant Act 1980 which provides that a landlord cannot unreasonably withhold consent to a change of use requested by a tenant.  The Authority therefore considers that the notified agreements between the ground landlords and Five Star Supermarket and Five Star Supermarket and its tenants do not offend against Section 4(1) of the Competition Act, 1991.

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 agreement between Leonard K. Ging and Henry J Lyons and their successors and Five Star Supermarket and the agreement between Five Star Supermarket and its tenants in relation to the lease of premises at Upper Drumcondra Road, Drumcondra, Dublin 9 notified under Section 7 on 30 September 1992 (Notification No. CA/609/92E), do not offend against Section 4(1) of the Competition Act, 1991.

For the Competition Authority

Des Wall
Member
4 February 1994