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OFT guidance on land agreements following law change

Companies involved in such agreements can also face fines of up to 10 per cent of their annual worldwide turnover.

The guidance aims to help businesses respond to this change in the law. It provides a practical framework and hypothetical examples of how typical agreements may be assessed.

The draft guidance makes clear that: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.
– The OFT is inviting business to give feedback on the draft Guidance by 14 January 2011, and aims to publish final guidance later in 2011.

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The draft guidance can be downloaded from http://www.oft.gov.uk/OFTwork/consultations/current/land-agreements/

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