Court says permitted use restriction breaks competition law

By Sarah Livestro

In a judgment that is likely to attract considerable attention, the Central London County Court has ruled that a permitted use restriction in a lease is anti-competitive and unenforceable.

Until 2011, the UK Land Exclusion Order exempted ‘land agreements’ from the ban on anti-competitive agreements. This meant that ‘permitted use’ restrictions — which restrict a tenant’s ability to carry on certain activities from leased premises — did not breach the UK competition law rules. Although the order is no longer in force, the view of the UK competition authorities — as set out in official Office of Fair Trading guidance — has always been that permitted use restrictions are unlikely to restrict competition. As a result, both landlords and tenants could be fairly confident that this type of restriction would ordinarily be legal and enforceable…

Click on the link below to read the rest of the Shoosmiths briefing.

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