Navigation path

Left navigation

Additional tools

Other available languages: FR DE

IP/01/908

Brussels, 27 June 2001

The Commission changes its policy on "ancillary restraints"

The European Commission has adopted a new Notice on restrictions directly related and necessary to concentrations (so-called "ancillary restraints"), which replaces a previous notice of 1990. Under the new policy, the Commission will no longer assess whether any restrictions entered into by parties in the context of a merger, such as non-competition clauses or purchase and supply obligations, are "ancillary", in which case they would automatically benefit from the effect of the clearance decision. Instead, companies and their lawyers will have to assess whether any such restraints can be covered by the merger decision, by a relevant block exemption or whether they might fall under article 81. The present Notice, which will be published in the Commission's website this week, provides guidance to the legal and business communities, based on past Commission practice and experience in this field. It is also in line with the ongoing modernisation of the European Union's competition policy.

The new Notice deals with the treatment of restrictions directly related and necessary to the implementation of concentrations, which are more commonly referred to as "ancillary restraints". These are contractual agreements which companies frequently enter into in the context of mergers. Common examples of such "ancillary restraints" are: non-competition clauses, licence agreements, or purchase and supply obligations.

The new Notice announces an important change of policy in the field of merger control: As of today, the Commission will no longer assess "ancillary restraints" in its merger decisions, thereby ending an 11-year old practice. The new policy is in line with the ongoing reforms in EC competition policy, based on the principles of simplification and modernisation. It needs to be seen in the context of the « modernisation » exercise which the Commission currently undertakes in the field of anti-trust procedures, and of the new block exemption regulations recently adopted in the field of state aid control.

Also, the new policy is in line with the simplified procedure which the Commission has applied to certain categories of mergers since September 2000. Indeed, in simplified procedure cases, the Commission has already stopped assessing « ancillary restraints ».

It should be noted that the Commission has never been under a legal obligation to assess and formally address « ancillary restraints » in its decisions under the Merger Regulation. Any such statements in past merger decisions have been of a purely declaratory nature, without having a legally binding effect on the parties or on national courts.

The main objective of the new Notice is to provide guidance to the legal and business communities, based on past Commission practice and experience in this field. From now on, companies and lawyers will have to assess themselves whether agreements concluded in the context of mergers can be considered « ancillary ». Conflicts between the parties will have to be settled before national courts ; this has, by the way, already been the case under the old policy.

Following are the most important changes in the new Notice:

  • The duration of non-competition clauses which are to be considered « ancillary » has been limited to two years for cases involving the protection of goodwill only, and to three years for cases involving the protection of both know-how and goodwill.

  • The duration of non-competition clauses in the case of joint ventures has been limited to five years in general and may, in any event, not exceed the lifetime of the joint venture in order to be considered « ancillary ». Durations which exceed three years need to be duly justified, based on the particular circumstances of the case.

  • The new Notice now also deals with clauses such as service and distribution agreements (to be treated as supply agreements), non-sollicitation and confidentiality clauses (to be treated as non-competition clauses), and it also refers to licences of trademarks, business names, design rights, copyrights and similar rights.

Clauses which cannot be considered « ancillary » are not per se illegal. They are just not automatically covered by a merger decision of the Commission. Nevertheless, they can be justified under Article 81 of the Treaty or fall within the scope of a block exemption regulation.


Side Bar