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:
Agreements that potentially restrict competition are subject to competition law.
Any agreement which affects trade or restricts competition in the UK may be subject to the prohibition on anti–competitive agreements under the provisions of Chapter