Non-compete provisions help protect a buyer’s significant investment in an acquired business. Although non-compete clauses often play a vital role in M&A deals, they are not immune from antitrust scrutiny.
Since September 2019, the FTC has challenged noncompete provisions in at least three transactions. These demonstrate that the Commission and other antitrust enforcers are closely scrutinising non-competes and will not hesitate to challenge problematic provisions, even when the underlying transaction raises no substantive antitrust issues or when the provision relates to minority investments.
Parties to a commercial transaction can easily manage this scrutiny by tailoring the scope.
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