A slap on the wrist for Waitrose could ease the pain for landowners

The CLO required the top supermarkets of 2010 to limit the imposition of restrictive covenants in land deals and release others. The target was to improve competition, as it was clear to the CMA that when buying land or taking leases the then top supermarkets usually tried to restrict a developer’s or landowner’s remaining land to non-food retail uses, which could restrict competition in the sector.

The CLO introduced a ban on certain supermarkets entering into restrictions and exclusivity arrangements that last for more than five years. Despite this, Waitrose seemingly continued to impose restrictions that went too far.

This area of law is not straightforward. There are two primary layers to contend with: the CLO and then general competition law. It may well be that one allows such restrictions where the other does not. After that, consideration has to be given as to what law applies to which supermarket as certain supermarkets are not subject to the CLO at all.

When developers and landowners come across such restrictions on their titles, there is merit in reviewing them to see if they will actually hold water if they are mischievous in terms of future plans for land. It may well be that the restrictions are capable of challenge and cannot be enforced. That said, such restrictions should be treated with caution, as if drafted carefully and with regard to the circumstances of the particular property concerned they can still bite.

Nowadays, when it comes to restrictive covenants, supermarkets should be vigilant in monitoring compliance with the CMA requirements to avoid the kind of attention drawn by Waitrose and to try to ensure restrictions they impose are allowed. Still, it is always worth a check if a developer or landowner comes across one.

Darren Williamson is national head of real estate at law firm Freeths