02 Aug French non competition clauses under E.U law

In French Contract law, the validity of the non competition clauses relies on three crucial points: the definition of a certain geographic space and time (evaluated according to reasonable and proportionate criteria); serving a legitimate interest for the company such as protecting its skills and confidential knowledge; combined with a certain limitation of the clause to enable the contracting party to pursue his professional activity after termination of the contract.

However, non competition clauses could serve illegitimate interests, tricking Competition law through bilateral agreements or abuses of a dominant position. They may aim at a share of the market between enterprises preventing any eventual competition (notably the onerous clauses independent from central conventions).

According to Commission Regulation (EC) No 2790/1999 on the application of Article 81(3) of the Treaty establishing the European Community to categories of vertical agreements and concerted practices, articles 2 and 5 (b), the French Cour de cassation (equivalent to the U.K House of Lords and the U.S Supreme Court) has just confirmed on June 9th 2009 according to the E.U Regulation, that this exemption can only apply to non competition clauses:

– limited to one year,
– stipulating the specific places used for the duration of the contract,
– and attempting to protect the knowledge and skills transmitted by the contractor.

Michaël & Ariane AMADO