BAILII is celebrating 24 years of free online access to the law! Would you
consider making a contribution?
No donation is too small. If every visitor before 31 December gives just £1, it
will have a significant impact on BAILII's ability to continue providing free
access to the law.
Thank you very much for your support!
[New search]
[Printable RTF version]
[Help]
Mount Juliet/David Leadbetter Golf Academy Inc. [1994] IECA 355 (19th September, 1994)
COMPETITION
AUTHORITY
Notification
No. CA/8/94 - Mount Juliet/David Leadbetter Golf Academy Inc.
Decision
No. 355
Price
£0.50
£0.90 incl. postage
Competition
Authority Decision of 19 September 1994 relating to a proceeding under Section
4 of the Competition Act, 1991.
Notification
No. CA/8/94 - Mount Juliet/David Leadbetter Golf Academy Inc
Decision
No. 355
Introduction
1. Notification
was made jointly by Mount Juliet and David Leadbetter Golf Academy Inc on 31
March 1994 with a request for a certificate under
Section 4(4) of the
Competition Act, 1991 or, in the event of a refusal by the Competition
Authority to issue a certificate, a licence under
Section 4(2), in respect of
an agreement between Mount Juliet and David Leadbetter Golf Academy Inc
relating to the establishment of a golf school at Mount Juliet, Thomastown, Co.
Kilkenny.
The
Facts
(a) Subject
of the notification
2. The
notification concerns an agreement for the establishment by the David
Leadbetter Golf Academy Inc of a golf instruction school at Mount Juliet.
(b)
The
parties involved
3. Mount
Juliet is an unlimited company and is the owner and operator of a hotel,
leisure centre and golf course at Mount Juliet. David Leadbetter Golf Academy
Inc (DLGA) is an Ohio corporation and operates golf schools in many countries
world wide. David Leadbetter, who is an employee of the corporation, is
regarded as probably the best known golf teacher in the world and numbers many
of the top ranking professional golfers among his students.
(c) The
Market
4. The
David Leadbetter Golf Academy is engaged in the provision of golfing
instruction. Most club golfers have probably had little or no formal
instruction by way of golfing school but those that require instruction
generally have recourse to their club professionals, golf driving ranges or
golf instructors outside clubs. The Yellow pages list 17 such instructors in
the greater Dublin area. Up to the middle 1980s, the vast majority of golf
courses were those owned by golf clubs whose use was largely confined to club
members most of whom resided within a reasonable distance of the course. In
more recent years there has been substantial investment in over 70 new golf
courses many of which cater primarily for the tourism and corporate visitor
sector. Mount Juliet falls into this latter category with its extensive hotel
and leisure and golfing complex, some distance from the more densely populated
areas in the State. The Mount Juliet golf course is considered to be among the
best in Europe and hosted the 1994 Irish Open Golf Championship which attracted
80,000 spectators. Since the mid 1980s the number of golfing tourists have
doubled with over 120,000 annually now visiting Ireland.
(c)
The
notified arrangements
5. The
notified agreement was made on 8 February 1994 between Mount Juliet and DLGA to
provide the arrangements for the opening of a separate golf instructional
academy at Mount Juliet to be operated by DLGA. The agreement provides for the
consultancy/advisory services to be provided by DLGA both for the
preopening/development stage and the operational stage, the appointment of DLGA
employees as chief instructor (Director) and other instructors and the
financial arrangements relating thereto. Mount Juliet is to provide premises
for the academy, specific numbers of golf holes and practice tees, covered
areas, equipment and accommodation for employees. The agreement provides for
the financial arrangements between the parties including remuneration and
revenues. DLGA agrees to procure that David Leadbetter subject to availability
shall provide his services personally at Mount Juliet for a specified maximum
number of days annually. Mount Juliet is permitted to use DLGA trademarks in
promoting the academy subject to specific approval of DLGA in each instance.
The trade mark remains the sole and exclusive property of DLGA. The agreement
contains confidentiality and competition clauses set out under. The agreement
is stated specifically not to be a joint venture and neither party can bind the
other in that regard. The agreement is effective from date of signature and
will terminate 5 years from the date the academy opens with provision for
earlier termination in the event of default on money payments or other
conditions of the agreement or insolvency of either party. The further
performance of the agreement is contingent on the parties applying for and
getting a licence for the exclusivity arrangements in clause 6.1 and 9 of the
agreement. The exclusivity provisions and confidentiality provisions of the
agreement are as follows:
"6.1
DLGA shall be the sole provider of golf tuition at Mount Juliet"
"9.
EXCLUSIVITY
During the term DLGA will not provide the services specified herein to any
third party located within Ireland and Northern Ireland"
"6.2
..... The company (Mount Juliet) agrees that, upon termination of this
agreement, it will not engage the services of any of the Academy Directors, or
any of the Academy Instructors for a period of 18 months from the date of such
termination .....".
"6.3
.... If any of the Company's employees (i.e. employees of Mount Juliet) are
trained in the "Leadbetter Method", the Company (Mount Juliet) agrees to
procure that such employees sign declarations of confidentiality .... such
employees undertake to keep confidential, and not use for their own benefit or
for the benefit of any third party, the information that they have been
provided with and the method of tuition that they have been taught in relation
to the "Leadbetter Method".
"21.
The Company (Mount Juliet) shall treat as confidential all information
supplied by DLGA which is designated as confidential by DLGA or which is by its
nature clearly confidential. The Company agrees not to divulge any of DLGA's
confidential information to any person or body unless authorised by DLGA. In
the event of termination of this Agreement, the Company shall return any
confidential information and all copies thereof (including all database
information) to DLGA at its registered office".
(e) Submission
by the Parties
6. The
parties accept that the notified agreement contains two exclusivity
arrangements in clauses 6.1 and 9. However, they maintain that the agreement
does not have as its object or effect the prevention, restriction or distortion
of competition in trade in any goods or services in the State or in any part of
the State. The parties argue that the restriction in clause 6.1, whereby DLGA
Inc will be the sole provider of golf tuition at Mount Juliet, does not offend
against
Section 4(1) of the
Competition Act because it would clearly be
impractical to have two different operations providing golf tuition in what is
a relatively small area. The parties also argue that the restriction in clause
9, whereby DLGA Inc. is prevented from providing its services to any third
party within Ireland or Northern Ireland during the term of the notified
agreement, does not offend against
Section 4(1) because it would be
unreasonable to Mount Juliet that the David Leadbetter Golf Academy would be
entitled to set up another academy in a country as small as Ireland in view of
the investment being made by Mount Juliet. The David Leadbetter organisation
has opened an academy in England and academies in a number of European
countries and in one or two Asian countries.
Assessment
7.
Section
4(1) of the
Competition Act 1991 prohibits and renders void all agreements
between undertakings, decisions by associations of undertakings and concerted
practices which have as their object or effect the prevention, restriction or
distortion of competition in trade in any goods or services in the State, or in
any part of the State.
(b)
The Undertakings.
8.
Section
3(1) of the
Competition Act defines an undertaking as "a person being an
individual, a body corporate or an unincorporated body of persons engaged for
gain in the production, supply or distribution of goods or the provision of a
service".
9. Mount
Juliet is engaged for gain in the provision of a service i.e. the operation of
a hotel and leisure facilities including golf, at Mount Juliet. DLGA is also
engaged for gain in the provision of a service i.e. golf tuition. The notified
agreement is an agreement between undertakings and has effect within the State.
(c)
The Agreement
10. The
Authority accepts that there is nothing anti competitive in Mount Juliet, the
owner and operator of tourism/leisure facilities, to choose to enter into an
agreement with a supplier of services to provide services at Mount Juliet
rather than supply them itself. As the agreement is largely concerned with
regulating the contract for the supply of those services its general
provisions, per se, do not raise issues under the
Competition Act.
11. Clause
6.1 ensures that for the duration of the agreement David Leadbetter Golf
Academy Inc will be the sole provider of golf tuition at Mount Juliet. This
will prevent the possibility of any professional golfer, qualified tutor or any
other golf academy from providing tuition at Mount Juliet on a commercial
basis. However, it would not prevent the possibility of them establishing a
golf tuition service nearby to Mount Juliet in competition to the DLGA.
Members and patrons are not forced to use the services of David Leadbetter Golf
Academy at Mount Juliet. They are free to avail of similar services provided
by other golf clubs. The Competition Authority accepts that it would be
impractical to have more than one golf tuition operation in any golf club. In
the opinion of the Competition Authority the provisions of Clause 6.1 do not
therefore offend against
Section 4(1).
12. Clause
9 provides that for the duration of the Agreement the David Leadbetter Golf
Academy will not provide golf instruction services to any third party located
within
Ireland
or Northern Ireland. This is an arrangement which has been equally accepted by
both parties to the agreement. Mount Juliet is supplying exceptional
facilities to attract a world name, the DLGA, to Mount Juliet. It seems
unlikely that DLGA would locate their academy at Mount Juliet in the absence of
such facilities but the capital investment by Mount Juliet would not have
proceeded without some assurance of exclusivity from DLGA. The DLGA
organisation has only one academy in the UK and it seems improbable that,
considering the much smaller size of the Irish market, they would wish to
dilute their custom at Mount Juliet or the international standing of their name
by establishing other academies within the State, at least in the relatively
short term of 5 years which is covered by the agreement. In any event, because
of the personal services of David Leadbetter to be supplied at Mount Juliet
under the contract, it would appear that the completion of similar agreements
by DLGA elsewhere in the State would not be very practicable. The agreement
does not prevent other golf courses establishing golf tuition centres elsewhere
in the State. It merely prevents DLGA from participating in such activities.
The Competition Authority, therefore, considers that clause 9 of the agreement
does not offend against
Section 4(1).
13. Under
clause 6.2 Mount Juliet agrees not to engage the services of any of the Academy
directors or instructors for a period of 18 months from the date of termination
of the agreement while clause 6.3 and clause 21 prevent the disclosure of
confidential information relating to DLGA or its tuition methods by Mount
Juliet or its employees. The Authority does not regard these restrictions as
being restrictive of competition as they do not prevent Mount Juliet, or
another party, from operating its own golfing school within the Mount Juliet
facilities after termination of the agreement. The purpose of the restriction
is to protect know-how which is the property of DLGA and without this
protection DLGA would not be prepared to enter into such arrangements. In
these circumstances the Competition Authority considers that clause 6.2, clause
6.3 and clause 21 of the notified agreement do not offend against
Section 4(1).
The
Decision
14. Mount
Juliet and David Leadbetter Golf Academy Inc are undertakings within the
meaning of
Section 3(1) of the
Competition Act, 1991 and the notified agreement
is an agreement between undertakings. In the Authority's opinion the notified
agreement between Mount Juliet and David Leadbetter Golf Academy Inc does not
offend against
Section 4(1) of the
Competition Act, 1991.
The
Certificate
15. The
Competition Authority has issued the following certificate:
The
Competition Authority certifies that in its opinion, on the basis of the facts
in its possession, the agreement dated 8 February 1994 between Mount Juliet and
David Leadbetter Golf Academy Inc. notified under
Section 7 on 31 March 1994
(notification no. CA/8/94) does not offend against
Section 4(1) of the
Competition Act, 1991.
For
the Competition Authority
Des
Wall
Member
19
September, 1994.
© 1994 Irish Competition Authority
BAILII:
Copyright Policy |
Disclaimers |
Privacy Policy |
Feedback |
Donate to BAILII
URL: http://www.bailii.org/ie/cases/IECompA/1994/355.html