RHM Ltd/Naresa Ltd [1995] IECA 394 (12th April, 1995)

RHM Ltd/Naresa Ltd [1995] IECA 394 (12th April, 1995)

The restrictive covenant in clause D1(b) of the lease, which prevents RHM Ltd from competing with Naresa Ltd for 12 months within a two-mile radius after surrender of the lease, is not necessary for the transfer of goodwill as the lessee already acquired the goodwill upon taking up the lease. The clause's object is to prevent and restrict competition, thus offending Section 4(1) of the Competition Act, 1991.

Citation
[1995] IECA 394
Parties
Lessor: RHM Ltd; Lessee: Naresa Ltd
Jurisdiction
Ireland
Procedural Posture
Competition Authority Proceeding / Decision on Notification for Certificate Under Section 4(4) of the Competition Act, 1991
Outcome
Refusal to issue certificate under Section 4(4) of the Competition Act, 1991
Legal Topics
Lease Restrictions, Anti Competitive Agreements, Goodwill Transfer, Restrictive Covenants
Competition Law Commercial Property Law Lease Restrictions Anti Competitive Agreements Goodwill Transfer Restrictive Covenants

Case Brief

Summary, issues, holding and outcome

More case intelligence is available

Unlock the full research layer for this judgment.

Full judgment text Downloadable case file Legal principles 2 Authorities cited 4 Party arguments 2 Amounts and remedies 6
Sign in to unlock

Parties

RHM Ltd

Lessor

Naresa Ltd

Lessee

Procedural Posture

Competition Authority Proceeding / Decision on Notification for Certificate Under Section 4(4) of the Competition Act, 1991

Legal Issues

  1. 1 Whether the lease agreement between RHM Ltd and Naresa Ltd contains clauses that prevent, restrict or distort competition in breach of Section 4(1) of the Competition Act, 1991
  2. 2 Whether the restrictive covenant in clause D1(b) is necessary for the transfer of goodwill or is anti-competitive

Ratio Decidendi

The restrictive covenant in clause D1(b) of the lease, which prevents RHM Ltd from competing with Naresa Ltd for 12 months within a two-mile radius after surrender of the lease, is not necessary for the transfer of goodwill as the lessee already acquired the goodwill upon taking up the lease. The clause's object is to prevent and restrict competition, thus offending Section 4(1) of the Competition Act, 1991.

Court Disposition

Refusal to issue certificate under Section 4(4) of the Competition Act, 1991

Orders

  • Certificate in respect of the lease agreement between RHM Ltd and Naresa Ltd (notification no. CA/8/93) is refused under Section 7(1) of the Competition Act, 1991.