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Need to know: OFT land agreements

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Need to know: OFT land agreements

Earlier this month, the Office of Fair Trading (OFT) produced draft guidance for businesses in property and retail about the land agreements that could be affected by competition law changes next April

What is a land agreement?

In the OFT guidance, a land agreement is a contract that creates, alters, transfers or terminates an interest in land.

This includes the transfer of freehold interests,best replica watches leases and assignment of leasehold interests. These are currently excluded from competition law under the Competition Act 1998, but that will change in April.

What is happening?

On 6 April 2011, land agreements that prevent, restrict or distort competition will become void and unenforceable.

Ahead of that change, the OFT has published draft guidance on land agreements that will be affected, on which it wants feedback by 14 January.

What could be affected?

The OFT only expects a minority of lease provisions to infringe the new rules. Primarily, it intends to remove restrictions that are aimed at making it more difficult for other businesses to compete effectively in a market.

In property, this covers restrictive covenants, whereby landlords agree with retail tenants not to let space nearby to a rival.

What happens if a company breaks the law?

Prohibited agreements may face enforcement action by the OFT, the European Commission or another regulator. They can impose fines of up to 10% of a company’s worldwide turnover and advise on how to end the restriction.

It will only apply to businesses, not individuals.

So an agreement on the use of residential property between individuals will not be covered.