F.B.H.Distributors Ltd/Harty Security Ltd/Harty Holdings Ltd/F.B.H.Ltd- Asset Purchase Agreement [1995] IECA 444 (30th November, 1995)

F.B.H.Distributors Ltd/Harty Security Ltd/Harty Holdings Ltd/F.B.H.Ltd- Asset Purchase Agreement [1995] IECA 444 (30th November, 1995)

The five-year non-compete clause in Article 16 exceeds what is necessary to secure the transfer of goodwill and thus offends Section 4(1) of the Competition Act, 1991. The restriction is not indispensable to the objectives of the agreement and does not qualify for a licence under Section 4(2).

Citation
[1995] IECA 444
Parties
Vendor: F. B. H. Distributors Limited; Vendor: Harty Security Limited; Vendor: Harty Holdings Limited; Purchaser: F. B. H. Limited
Jurisdiction
Ireland
Procedural Posture
Competition Authority Notification/decision / Final Decision on Notification for Certificate or Licence Under Competition Act, 1991
Outcome
Refusal to issue certificate or grant licence under Section 4 of the Competition Act, 1991.
Legal Topics
Asset Purchase Agreement, Non Compete Clause, Section 4 Competition Act 1991, Sale of Business, Restrictive Covenants
Competition Law Asset Purchase Agreement Non Compete Clause Section 4 Competition Act 1991 Sale of Business Restrictive Covenants

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Parties

F. B. H. Distributors Limited

Vendor

Harty Security Limited

Vendor

Harty Holdings Limited

Vendor

F. B. H. Limited

Purchaser

Procedural Posture

Competition Authority Notification/decision / Final Decision on Notification for Certificate or Licence Under Competition Act, 1991

Legal Issues

  1. 1 Whether the five-year non-compete clause in the asset purchase agreement offends Section 4(1) of the Competition Act, 1991
  2. 2 Whether the agreement qualifies for a certificate or licence under Section 4(4) or Section 4(2) of the Competition Act, 1991

Ratio Decidendi

The five-year non-compete clause in Article 16 exceeds what is necessary to secure the transfer of goodwill and thus offends Section 4(1) of the Competition Act, 1991. The restriction is not indispensable to the objectives of the agreement and does not qualify for a licence under Section 4(2).

Court Disposition

Refusal to issue certificate or grant licence under Section 4 of the Competition Act, 1991.

Orders

  • Refusal to issue certificate under Section 4(4) of the Competition Act, 1991.
  • Refusal to grant licence under Section 4(2) of the Competition Act, 1991.