The Commerce Commission is taking property firm NGB Properties to court over the use of anti-competitive land covenants.
The Commerce Act prohibits the use of land covenants that either had the intention or were likely to dampen competition. Photo: RNZ / Alexander Robertson
The regulator has alleged that NGB bought a property in Tauranga and placed a covenant on the land to prevent Bunnings from building close to a Mitre 10 Mega store owned by an NGB-associated company Juted Holdings.
"In the Commission's view, this amounted to a purpose of substantially lessening competition for the retailing of hardware and home improvement goods in central Tauranga," it said in a statement.
The Commerce Act prohibits the use of land covenants that either had the intention or were likely to dampen competition.
The proceedings have been filed in the High Court in Wellington and both parties have agreed on a settlement, with a penalty hearing to be scheduled shortly.
The Commission highlighted the issue of restrictive land covenants and their effect in the broader economy in its recent building products industry study, calling for a broader look by the government.
In each of its three industry studies - fuel retailing, groceries, building products - land covenants have been identified to some degree as being prevalent and used to limit competition in each of the sectors.
The government pushed through a law change to make covenants illegal in the grocery sector.