OFT issues draft guidance on land agreements and competition law

The Office of Fair Trading has published draft guidance about the types of land agreements that might fall foul of competition law.

The guidance is intended to help businesses prepare for a change in the law from 6 April 2011. Until now, land agreements between businesses benefited from special treatment under UK competition law. However from next year land agreements that prevent, restrict or distort competition will be void and unenforceable.

The OFT sets out in the guidance that:

• “There is no presumption that a restriction in a land agreement constitutes an infringement of competition law, and the OFT expects that only a minority of restrictions will be anti-competitive
• The types of restriction most likely to impact competition are those which keep other companies out of a market, or which aim to make it more difficult for other businesses to compete
• The law will only apply to land agreements between businesses, and not transactions with individuals.”

OFT Senior Director for Policy, Cavendish Elithorn, said: “The application of competition law will remove barriers to new businesses and open up competition in local areas for the benefit of consumers. In the vast majority of cases we would not expect land agreements to raise competition problems.

“However terms which restrict the process of competition, for example clauses to stop competitors from using land, can be problematic. This guidance is designed to reassure companies when there is unlikely to be a problem and help them assess when they need to take professional advice.”

The OFT has called for feedback on the draft guidance, which can be downloaded here, by 14 January 2011. It can be downloaded here.

The final guidance will be published in 2011.