Under our law, a non-competition clause is not a price-fixing agreement. Nor does it offer manipulation. At most, it is a form of distribution or allocation in the market or an agreement to prevent, restrict or weaken competition. As such, it is not considered per se, but at most a non-per-ie violation. But first, we should define what a non-competitive clause (as used in the Philippines) or a non-compete agreement is. Investopedia defined it in such a way that a competition agreement prevents a worker from working as a direct competitor with his employer for a certain period of time and in a given geographic area. Non-competition prohibitions are designed to prevent a former worker from exploiting the resources, knowledge and/or leads acquired during the work and use of the resources of a former employer. A non-competition agreement can also be referred to as a “non-competition clause,” an “alliance against competition” or simply a “non-competition clause.” In the United Kingdom, a non-competition clause is called “trade restriction.” The question is whether the clause is still valid in light of the Competition Act (PCA) in the Philippines. In other jurisdictions, there have been cases where competition authorities have challenged the validity of the agreement. Of course, these two cases have their own unique real parameters, which must be carefully analyzed before being used in a Filipino environment.
It is important that the landscape of competition bans has changed. In the past, cases of non-competition have been called into question due to trade restrictions. The APC imposes fines for anti-competitive agreements, with the first offence of up to 100 million P. and the second up to 250 million P250 million. High fines alone should make people more sensitive to the effects of non-competition clauses on cartels and abuse of dominance. The CPA contains two types of prohibited agreements between competitors or between competitors. The first is an agreement on price agreements and supply manipulation, which in itself constitutes a violation of the law. The second is an agreement that “prevents, limits or significantly reduces competition” (Article 14). Since the disputed settlement exists, the validity of the non-competition clauses depends on the relevance of the non-competition agreement, geographic coverage, duration and whether the restriction is reasonably related to a legitimate objective.
One legitimate objective is to protect a buyer`s ability to take advantage of the benefits of the purchased business. Read more: Non-Competition Agreement www.investopedia.com/terms/n/noncompetition-agreement.asp#ixzz5GXPqx76E Follow us: Investopedia on Facebook An example in the United States of a case involving non-compete bans is the purchase of a client list of JCI Jones Chemicals Inc. by Oltrin Solutions, LLC for $5.5 million with JCI`s agreement not to compete with the north carolina or south Carolina mass pond industry for six years. The Federal Trade Commission challenged the validity of the non-competition clause. It submitted that it had eliminated effective, direct and substantial competition between Oltrin and JCI in the market in question; Significantly increase market concentration in sales of mass pine products; and Oltrin s has increased to be able to increase the prices of mass rolling products. It appeared that there was no legitimate commercial objective advanced by the transaction. The European Commission has imposed fines of approximately 66.9 million euros on Telefonica and Portugal Telecom and 12.3 million euros for the inclusion of the non-competition clause.