COMPETITION • EUROPEAN LAW • MERGERS
According to Communication 2005/C 56/03 of 5 March 2005, non-compete clauses constitute ancillary restrictions that mirror the main transaction, when they are limited in time, space and substance. Their duration must not exceed three years and they must not relate to a business or the transfer of know-how. Otherwise, their duration must not exceed two years. However, it may be longer if the sector in question is characterized by unusually long life cycles or a high degree of customer loyalty. Non-compete clauses may not relate to assets or intellectual property rights that enjoy specific protection. They must be limited to the products and services that are the subject of the seller’s business. In the case of a joint venture, the non-compete clause is ancillary only when it applies during the period in which each party has a controlling interest in the joint venture and cannot extend beyond the life of the joint venture.
