Stifling competition? Restrictive covenants on land under scrutiny in new ‘Fast Track’ Tribunal procedure

Written on 7 Mar 2016

The UK’s Competition Appeal Tribunal (CAT) is to consider a claim by a property developer that restrictive covenants which give Tesco exclusivity over grocery retailing are anti-competitive.

The claimant, property developer High Peak Developments (High Peak), is seeking a declaration that the covenants are unenforceable. Further details of the claim, brought last month under the new CAT “Fast Track” procedure, are not known, but it seems likely that High Peak is looking to include covenants which prevent grocery retail use on adjoining land, giving Tesco exclusivity over the area. 

This is the second claim brought under the Fast Track procedure, which should result in a trial being held within six months. The first claim settled out of court, so the new process remains untested. The procedure is designed to limit the costs faced by individuals and SMEs, and to provide certainty as early as possible. If the process is successful it may encourage damages claims in other cases of anti-competitive behaviour, such as cartels. 

It is relatively rare for restrictive covenant cases in real estate to come to court on competition grounds so the outcome of this case will be of particular interest for developers and retailers.