SCORCHED EARTH: THE USE OF RESTRICTIVE COVENANTS TO STIFLE COMPETITION

Abstract

Restrictive covenants running with freehold land are sometimes used as a means of impeding commercial competition. For example, when a firm elects to relocate a retail operation and sell the existing site, a covenant may be placed on the title to that site designed to prohibit a competing retail business from operating on those lands. It is known, for example, that the multinational grocery chain Safeway has adopted this practice extensively in Edmonton. Likewise, the practice is found in other Canadian and American cities, in relation not only to grocery stores, but also concerning a range of other retail businesses. Still, little is known about the extent to which covenants are used in this manner. This article contains an empirical inquiry into the use of covenants in a commercial setting in Edmonton, Alberta. It also explores the manner in which the law responds, and should respond, to mediate public values and private interests within this context.