Office of Fair Trading Publishes Draft Guidance on Land Agreements
The OFT has today published draft Guidance about the types of land agreements between businesses that might breach competition law.
Up until 6 April 2010, land agreements had benefited from an exclusion from the UK competition rules prohibiting anti-competitive agreements. A transition period is now in place and, from 6 April 2011, land agreements that prevent, restrict or distort competition in the UK will be void and unenforceable.
Businesses involved in such agreements can also face fines of up to 10 per cent of their annual worldwide gross turnover.
The OFT has published the Guidance to assist businesses in complying with this change in the law. It provides a clear explanation of the legal framework together with examples of how typical agreements are likely to be assessed.
The draft Guidance explains that:
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There is no presumption that a restriction in a land agreement constitutes an infringement of competition law. In fact, the OFT expects that only a minority of restrictions will be anti-competitive.
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The types of restriction most likely to impact competition are those which exclude other businesses from a market, or which aim to make it more difficult for other firms to compete.
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The law will only apply to land agreements between businesses. It will not apply to transactions with individuals.
The OFT has invited Business to give feedback on the draft Guidance by 14 January 2010. The OFT expects to publish the final Guidance later in 2011.
Commenting on the draft Guidance, Douglas McLachlan, an Associate in Biggart Baillie LLP’s Competition Team said:
“The repeal of the Land Agreements Exclusion Order is unlikely to mean that every land agreement between businesses in the UK will fall foul of competition law, but it’s clearly the case that some agreements will. Businesses need to review their land agreements and put their house in order before the new rules come into full force in 6 April 2011. The OFT’s draft Guidance will help them to do that.”
For more information please contact Colin Miller or Douglas McLachlan.
Click here for Colin Miller’s article on the repeal of the Land Agreements Exclusion Order.
The information contained in this article is given for general information only, reflects the current law on the date of the article, and does not constitute legal advice on any specific matter