Anti-competitive land covenants under the Commerce Act 1986

A land covenant that restricts competition is unenforceable and in breach of section 28 of the Commerce Act 1986.

The Commerce Commission New Zealand provides authoritative information on anti-competitive land covenants, including how to assess whether a land covenant is in breach of section 28.

Read the Commerce Commission’s advice on anti-competitive land covenants

Removing or modifying grocery-related land covenants

The Commerce Act 1986 was amended in June 2022 to prevent the use of land covenants restricting competition in the grocery sector.

Section 28B of the Act sets out provisions for the removal or modification of these covenants, including that:

  • the designated grocery retailer may revoke or modify the covenant, and
  • the revocation or modification instrument may be executed by the designated grocery retailer alone.

The following instrument types have been added to Landonline to enable this:

  • Commerce Act 1986 – revocation of land covenant – instrument code ‘RCLC’
  • Commerce Act 1986 – partial revocation of land covenant – instrument code ‘PRCL’
  • Commerce Act 1986 – variation of land covenant – instrument code ‘VCLC’.

These are Image Only instruments with certifications. A modified version of Form 27 or 28 of the Approved Electronic Forms can be used.

Practitioners are required to certify that they:

  • have authority to act on behalf of the covenantee
  • have taken reasonable steps to verify the identity of the covenantee
  • have complied with any statutory requirements specified by the Registrar for the class of instrument, and
  • hold evidence showing the truth of those certifications.

Practitioners must retain that evidence and produce it if the dealing is selected for compliance review in accordance with section 30 of the Land Transfer Act 2017.

For the sake of clarity, the covenantee is the designated grocery retailer (as defined in section 28A(4) of the Act).

The provisions set out in section 28B of the Act will be repealed on 30 June 2024.