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Johannesburg - In a consent order published on the Competition Tribunal's website, Liberty Holdings [JSE:LBH] agreed to pay an administrative penalty of just over R18m, which was 2.5% of its retail property portfolio's total turnover for the 2008 financial year.
It is apparent from the consent order that the Competition Commission had initiated a complaint against, among others, Liberty and Bedford Square Properties for alleged prohibited market division between them, arising from a notarial deed of restraint.
Petra Krusche, a director in the competition and regulatory practice at Cliffe Dekker Hofmeyr business law firm, said: "From the high court judgment handed down at the end of 2009, relating to the enforceability of the same restraint, it appears that Liberty and Bedford are both landlords of shopping malls in the same area, namely Eastgate and Village View.
"The notarial deed of restraint in favour of Liberty effectively precluded Bedford from letting premises in its centre to Woolworths and Mica for a period of 11 years from 2003. Bedford sought to have the restraint declared unenforceable as being against public policy."
However, the court found that the restraint was binding on the parties as public policy should only be invoked as a ground for the invalidity of an agreement in "clear cases in which the harm to the public is substantially incontestable as public policy generally favours the utmost freedom of contract, and requires that commercial transactions should not be unduly trammelled by restrictions on that freedom".
It was apparent from the consent order that the commission found the selfsame restraint to amount to prohibited market division under section 4(1)(b)(ii) of the Competition Act.
Krusche said that in the consent order, Liberty also agreed with the commission not to enforce the restraint, that the conduct in question had ceased and that it would waive its entitlement to rely on these registered rights.
She said that, commercially, non-compete clauses and restraints are entered into if parties seek to protect their interests in certain markets or to maintain value, for example in a sale of business agreement.
It is apparent from the consent order that the Competition Commission had initiated a complaint against, among others, Liberty and Bedford Square Properties for alleged prohibited market division between them, arising from a notarial deed of restraint.
Petra Krusche, a director in the competition and regulatory practice at Cliffe Dekker Hofmeyr business law firm, said: "From the high court judgment handed down at the end of 2009, relating to the enforceability of the same restraint, it appears that Liberty and Bedford are both landlords of shopping malls in the same area, namely Eastgate and Village View.
"The notarial deed of restraint in favour of Liberty effectively precluded Bedford from letting premises in its centre to Woolworths and Mica for a period of 11 years from 2003. Bedford sought to have the restraint declared unenforceable as being against public policy."
However, the court found that the restraint was binding on the parties as public policy should only be invoked as a ground for the invalidity of an agreement in "clear cases in which the harm to the public is substantially incontestable as public policy generally favours the utmost freedom of contract, and requires that commercial transactions should not be unduly trammelled by restrictions on that freedom".
It was apparent from the consent order that the commission found the selfsame restraint to amount to prohibited market division under section 4(1)(b)(ii) of the Competition Act.
Krusche said that in the consent order, Liberty also agreed with the commission not to enforce the restraint, that the conduct in question had ceased and that it would waive its entitlement to rely on these registered rights.
She said that, commercially, non-compete clauses and restraints are entered into if parties seek to protect their interests in certain markets or to maintain value, for example in a sale of business agreement.
