The decision of the Competition Council provides guidance as to the scope of non-competition clauses that are accepted as restrictions ancillary to acquisition agreements. In its interpretation of such restrictions, the Competition Council applied the principles set forth in the notice of the European Commission on ancillary restrictions. According to the principles applied in this case, the non-competition restriction imposed on the seller must be limited to products and services which constitute the economic activity of the undertaking transferred. Similarly, the territorial scope of the non-competition clause must be limited to the geographical business activity area of the seller before the acquisition. Finally, the duration of the non-competition clause has to be reasonable. As a general rule, a period of five years is considered reasonable if both goodwill and know-how are transferred, and a period of two years when only goodwill is transferred.

Christian Wik and Nina Isokorpi
Roschier-Holmberg & Waselius
Helsinki