Sedgwick Dineen/Legal and Commercial Insurances [1994] IECA 332 (10th June, 1994)

Sedgwick Dineen/Legal and Commercial Insurances [1994] IECA 332 (10th June, 1994)

The five-year non-compete and non-solicitation clauses in the Asset Purchase Agreement exceed what is necessary to secure the transfer of goodwill and thus offend against Section 4(1) of the Competition Act. The one-year restriction on soliciting employees post-employment in the service agreements also exceeds what is necessary to protect proprietary interests and offends against Section 4(1). These restrictions are not indispensable and do not satisfy the requirements for a licence under Section 4(2).

Citation
[1994] IECA 332
Parties
Purchaser: Sedgwick Dineen Limited; Vendor: Legal and Commercial Insurances Limited; Covenantor: Paschal Butler; Covenantor: Kieran Halpin; Covenantor: Martin Murray; Covenantor: Henry Collier; Covenantor: Peter Lyons
Jurisdiction
Ireland
Procedural Posture
Competition Authority Notification/decision / Final Decision on Notification for Certificate or Licence
Outcome
Refusal to issue certificate or grant licence
Legal Topics
Non Compete Clauses, Sale of Business, Employment Covenants, Section 4(1) Competition Act, Section 4(2) Competition Act
Competition Law Non Compete Clauses Sale of Business Employment Covenants Section 4(1) Competition Act Section 4(2) Competition Act

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Parties

Sedgwick Dineen Limited

Purchaser

Legal and Commercial Insurances Limited

Vendor

Paschal Butler

Covenantor

Kieran Halpin

Covenantor

Martin Murray

Covenantor

Henry Collier

Covenantor

Peter Lyons

Covenantor

Procedural Posture

Competition Authority Notification/decision / Final Decision on Notification for Certificate or Licence

Legal Issues

  1. 1 Whether the non-compete and non-solicitation clauses in the Asset Purchase Agreement and service agreements offend against Section 4(1) of the Competition Act
  2. 2 Whether the restrictions are indispensable and satisfy the requirements for a licence under Section 4(2)

Ratio Decidendi

The five-year non-compete and non-solicitation clauses in the Asset Purchase Agreement exceed what is necessary to secure the transfer of goodwill and thus offend against Section 4(1) of the Competition Act. The one-year restriction on soliciting employees post-employment in the service agreements also exceeds what is necessary to protect proprietary interests and offends against Section 4(1). These restrictions are not indispensable and do not satisfy the requirements for a licence under Section 4(2).

Court Disposition

Refusal to issue certificate or grant licence

Orders

  • Certificate refused under Section 4(1) of the Competition Act
  • Licence refused under Section 4(2) of the Competition Act