Retail Leasing Update

Global Publication November 2017

This week the Australian Competition and Consumer Commission (ACCC) released a draft determination recommending the re-grant of authorisation to the Shopping Centre Council of Australia (SCCA) for its Casual Mall Licensing Code of Practice (Code) until 31 December 2020.

The Code is a voluntary code of practice applying to shopping centre owners and managers (landlords) who have “signed up” to the Code. 

The Code regulates the terms by which a landlord may grant an occupancy right of part of the common area of a retail shopping centre for the sale of goods or the supply of services to the public.  Commonly classified as “pop-up shops”, the occupancy rights governed by the Code are granted for no more than 180 days.

The Code applies Australia wide, except in South Australia.

Some key provisions of the Code include:

  • landlords must maintain a casual mall licensing policy for the centre, incorporating a floor plan showing the locations where the casual mall licences may be offered;

  • landlords are required to give tenants and prospective tenants information about the casual mall licences in the relevant centre;

  • landlords must ensure that the business conducted by the holder of a casual mall licence does not substantially interfere with the sightlines to a tenant’s shopfront;

  • landlords are restricted from granting a casual mall licence which unreasonably introduces an external competitor to an adjacent tenant (there are some exceptions to this provision); and

  • landlords are required to reduce the non-specific outgoings to be paid by permanent tenants in the centre in a manner reflective of the number of casual mall licences granted.

The ACCC has taken submissions on its determination from a host of interested parties including seven major landlords (Scentre Group, Charter Hall, QIC, Dexus, Stockland, Vicinity and Perron Group) and other industry associations such as the National Retail Association, the National Online Retailers Association and the Franchise Council of Australia (FCA).

The major landlords showed support for re-authorisation of the Code as, generally, the Code enables efficiency and harmonisation across jurisdictions. The major landlords were also of the view that the Code supported competition to ultimately benefit consumers.

Other submissions noted that the Code allowed tenants the opportunity to trial new concepts before committing to a lease and also gave the opportunity for retailers to use casual mall sites to clear excess stock and/or participate in centre-wide promotions for special events.

The Australian Retailers Association, the FCA and the Pharmacy Guild of Australia (in a joint submission) did not support re-authorisation of the Code (without amendment). Among other reasons, these bodies held the view that the Code is now used purely as a profit-driving mechanism for shopping centres.

The submissions indicated only a small number of disputes arising under the Code, supporting its success over the past ten years.

The ACCC is now seeking submissions from the public in response to the draft determination before making a final determination. Subject to submissions, a final determination will be made by the ACCC by December 2017.  In the meantime, the ACCC has granted an interim authorisation to the SCCA to continue to give effect to the Code (in its current form) which ensures the Code will not conclude before the ACCC’s final determination.

Interestingly, the benefits of efficiency and harmonisation across jurisdictions were widely asserted in the submissions. The same cannot be said of the views of the industry in relation to the over-prescriptive and inconsistent retail legislation across the country, leading to unnecessary compliance costs and red tape for all industry participants.  Industry players may (again) be optimistic that the determination in relation to the Code will prompt key decision-makers to consider a uniform national retail leasing code of conduct.

All information contained in this Legal Update relating to the Casual Mall Licensing Code of Practice has been obtained from the document titled “ACCC Draft Determination and Interim Authorisation - Application for revocation of A91329 & A91330 and the substitution of authorisations A91591 & A91592” lodged by SCCA in respect of the Casual Mall Licensing Code of Practice dated 31 October 2017.

For further information about this Legal Update or Retail Leasing in Australia generally, please contact Tom Young on (07) 3414 2845 or Sarah Philipson on (07) 3414 2921.

Recent publications

Subscribe and stay up to date with the latest legal news, information and events...