16.3 Excursion: Non-Competition Clauses 471Ancillary and necessary restrictions. The condition that an ancillary restriction
be necessary implies a two-fold examination.
First, one has to establish whether the restriction is objectively necessary for the
implementation of the main operation.^29 The ECJ recognises the risk that the ven-
dor, with its particularly detailed knowledge of the transferred undertaking, can be
in a position to win back its former customers immediately after the transfer and
thereby drive the undertaking out of business. In Remia v Commission, the ECJ
therefore held that a non-competition clause is objectively necessary for a success-
ful transfer of undertakings where it is clear that there would not be any agreement
for the transfer of the undertaking if the vendor and the purchaser remained com-
petitors after the transfer without such a clause.^30
Second, where a restriction is objectively necessary to implement a main opera-
tion, it is still necessary to verify whether the restriction is proportionate to it,^31
i.e. whether its duration and its material and geographic scope do not exceed what
is necessary to implement that operation. If the duration or the scope of the restric-
tion exceed what is necessary in order to implement the operation, it must be as-
sessed separately under Article 81(3) of the EC Treaty.^32
In its decisions, the Commission has found that a number of restrictions were
objectively necessary to implementing certain operations. Failing such restrictions,
the operation in question could not be implemented or could only be implemented
under more uncertain conditions, at substantially higher cost, over an appreciably
longer period, or with considerably less probability of success.^33
According to Commission notice on ancillary restrictions,^34 non-competition
obligations which are imposed on the vendor can be necessary to the implementa-
tion of the concentration.^35 However, such non-competition clauses are only justi-
fied “by the legitimate objective of implementing the concentration when their du-
ration, their geographical field of application, their subject matter and the persons
subject to them do not exceed what is reasonably necessary to achieve that end”.^36
Non-competition clauses are justified for periods of up to two or three years,
depending on whether the transfer of the undertaking includes the transfer of cus-
tomer loyalty in the form of both goodwill and know-how.^37
Clauses which limit the vendor’s right to purchase or hold shares in a company
competing with the business transferred are considered directly related and neces-
(^29) See, for example, Case T-112/99 Métropole télévision (M6) and others v Commission
[2001] ECR II-2459, paragraph 106.
(^30) Case 42/84 Remia v Commission [1985] ECR 2545, paragraph 19; Case T-112/99 Mé-
tropole télévision (M6) and others v Commission [2001] ECR II-2459, paragraph 110.
(^31) See Métropole télévision, ibid, paragraph 106.
(^32) Métropole télévision, paragraph 113.
(^33) Métropole télévision, paragraph 111.
(^34) Commission Notice on restrictions directly related and necessary to concentrations, OJ
C 56, 5 March 2005 pp 24–31.
(^35) Commission Notice, paragraph 18.
(^36) Commission Notice, paragraph 19.
(^37) Commission Notice, paragraph 20.