Non-compete clauses in commercial agreements
Published by a LexisNexis Commercial expert
Practice notesNon-compete clauses in commercial agreements
Published by a LexisNexis Commercial expert
Practice notes
This Practice Note considers non-compete clauses in commercial agreements and the effect of the Competition Act 1998 (Vertical agreements Block exemption) Order 2022, SI 2022/516 (the UK VABEO). 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:
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non-compete clauses in distribution agreements etc
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non-compete clauses in consultancy agreements
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exclusive supply obligations
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exclusive purchase obligations
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minimum spend commitments
Agreements that potentially restrict competition are subject to competition law.
Introduction to competition law
Chapter I of the CA 1998 prohibits agreements between undertakings, decisions by associations of undertakings or concerted practices which have as their object or effect the prevention, restriction or distortion of competition
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Jurisdiction(s):
United Kingdom
Related legal acts:
Key definition:
Vertical agreements definition
What does Vertical agreements mean?
Vertical agreements, as set out in Article 1(1)(a) of the VRBE, are defined as agreements or concerted practices entered into between two or more undertakings operating for the purposes of that particular arrangement at a different level of the production or distribution chain, and relating to the conditions under which the parties may purchase, sell or resell goods or services.
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