Non-compete clauses in commercial agreements
Non-compete clauses in commercial agreements

The following Commercial practice note provides comprehensive and up to date legal information covering:

  • Non-compete clauses in commercial agreements
  • Non-compete clauses in distribution agreements etc
  • Example clause
  • Drafting notes
  • Legal issues
  • In agency agreements
  • In joint venture agreements
  • In franchising agreements
  • Non-compete clauses in consultancy agreements
  • Example clause
  • More...

Brexit: As of exit day (11pm on 31 January 2020) the UK is no longer an EU Member State. However, in accordance with the Withdrawal Agreement, the UK has entered an implementation period, during which it continues to be subject to EU law. This has an impact on this Practice Note. For further guidance, see Brexit Bulletin—key updates, research tips and resources and Brexit toolkit.

This Practice Note considers non-compete clauses in commercial agreements. Non-compete clauses are contractual obligations restricting a party from competing with the business of another. They take a wide range of forms and various terminology is used to describe them; they may also be referred to as exclusivity clauses, exclusivity provisions, non-poaching clauses, non-solicitation clauses, restraint of trade clauses or restrictive covenants.

This Practice Note considers the following common forms of non-compete restriction in standard vertical commercial arrangements between entities that are not actual or potential competitors:

  1. non-compete clauses in distribution agreements etc

  2. non-compete clauses in consultancy agreements

  3. exclusive supply obligations

  4. exclusive purchase obligations

  5. minimum spend commitments

Agreements that potentially restrict competition are subject to domestic and European competition law. Article 101 of the Treaty on the Functioning of the European Union (TFEU) prohibits all agreements that may affect trade between Member States and that have as their object or effect the prevention, restriction or distortion of competition. Restrictive agreements between competitors (whether actual or potential) are

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