It used to be the case that UK competition law did not relate to land agreements. However, since 6 April 2011 this is no longer the case. It is therefore possible that if you were to impose a restrictive covenant on a property that you are selling, it may be unenforceable in certain circumstances. For example, if you are the owner of a property on which you operate a pub or restaurant and when selling your land you place a restrictive covenant on it to prevent others using that land as a pub or restaurant to protect your other similar businesses in the area, this could be subject to competition laws.
Part of the test is whether the parties who are buying/selling have only a small market share in respect of the business use being restricted within the relevant geographical area. If that is the case, then the restrictive covenant is unlikely to be anti-competitive. However, if the covenant has the effect of preventing others from competing in the geographic area, then the covenant may well be anti-competitive and therefore unenforceable.
The message here is that if you are seeking to protect your business in an area when selling off land by imposing restrictive covenants, it is possible that going forward, those restrictive covenants might be of little or no effect.
For further information please contact Nigel Mason on 0207 355 6103 or e-mail nmason@hamlins.co.uk