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Very few property transactions are likely to give rise to OFT-related competition
issues, simply because the markets for commercial office space, residential
property, retail premises, etc are highly competitive in most parts of the country.
Thus, even a massively large property portfolio is unlikely to be seen to distort
competition. But, certain property uses can create competition issues.
If the property is being used for particular types of activity (eg betting shop,
cinema or supermarket) within a local catchment area, then it is possible that a
landowner who simply acquires the freehold or leasehold of the property may
therefore be treated as acquiring the business carried on in those premises,
and that may then give rise to substantive competition concerns if the acquirer
already has competing businesses in the same area. The classic example is
supermarkets, and there is now a steady flow of notifications to the OFT of
supermarket acquisitions. The point, of course, is that supermarkets compete in
local markets and therefore the Merger Control Rules have been used regularly
to prevent a single grocery retailer attempting to dominate a local area by buying
up competitors’ stores. In such cases, a retailer who buys property without
obtaining prior clearance carries the risk that the OFT may ultimately require the
buyer to divest itself of part of the combined business. Source: Lovells .© Practical Lawyer
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November 2008 |
