NGB Properties has been fined $500,000 over an anti-competitive covenant aimed at preventing competitor Bunnings from opening a Bunnings Warehouse close to Mitre 10 Mega in Tauranga.

The penalty was handed down in the Wellington High Court after the Commerce Commission took action against the conduct.

This is the first time a penalty has been imposed under section 28 of the Commerce Act, which prohibits the use of land covenants that have the purpose of substantially lessening competition.

“In this case, the covenant was intended to stop Bunnings, a competitor to Mitre 10, from building close by which would deprive Kiwis in Tauranga of the benefits that might have come from a more competitive local market for DIY and building supplies,” said John Small, Commerce Commission chair.

The Commission has identified land covenants in three markets – fuel, groceries, and residential building supplies – and considers they may be limiting competition across many sectors of the New Zealand economy, Small added.

In imposing the fine, Justice Cooke agreed that the issue of restrictive land covenants is very serious.

“It is important for the court to impose a penalty that is significant, and which operates as an effective deterrent against this kind of conduct.”

NGB is the sister company of Juted Holdings, which operates the Mitre 10 Mega in Tauranga.

In late 2019, it bought a land plot on Cameron Road about 500m from the Mitre 10 Mega store and later placed a covenant to prevent the land from being used as a hardware store.