It is common for land to be subject to an agreement which affects how the land can be used. This is known as a covenant.
Covenants are often noted on the Record of Title (certificate of title) of the land, or they can be contained in another interest in the land such as a lease. However, in certain circumstances, land covenants can harm competition by raising barriers to entry or expansion in a particular market, making it harder for competitors to compete effectively or gain scale.
What land covenants are unlawful?
Section 28 of the Commerce Act prohibits the requiring, giving, carrying out, or enforcing of a covenant that has the purpose, effect, or likely effect of substantially lessening competition in a market. Such covenants are also unenforceable.
Our approach to assessing anti-competitive land covenants
When businesses are considering whether to lodge, carry out, or enforce a land covenant, they should consider the potential impact of the covenant on competition, including whether the covenant is at risk of breaching section 28.
We have published a fact sheet on anti-competitive land covenants, which outlines our approach to assessing whether land covenants are in breach of section 28, which will assist businesses to assess this themselves. The fact sheet also provides an overview of some of the types of land covenants that may breach section 28.
Under the Commerce Act, the Commission can authorise a land covenant that lessens competition where it is satisfied that the benefits to the public outweigh the harm.
If you wish to lodge, carry out, or enforce a land covenant you think may risk breaching Commerce Act, you can apply to the Commission for an authorisation.
