Recent jurisprudence

Discussion deserves a recent ruling by the Court in preliminary relief proceedings. In short, the issue at issue is as follows. The plaintiff, a general practitioner, sold his general practice, which also includes a pharmacy, to the defendant, in which context an agreement was concluded between the parties on 6 July 2000. This agreement included a non-competition clause which, in short, had the purport that the selling party (the plaintiff) undertook not to engage in any activities as a general practitioner in any form within a circle of 9 kilometers around the general practice for a period of 10 years. anyway, to continue. On October 11, 2002, the defendant, the party to whom the general practice was transferred, died. The heirs in turn entered into an agreement with a third party on the basis of which the practice was transferred to this third party on 1 April 2003 against payment of an amount of € 300,000. The claimant – who had meanwhile returned after being a general practitioner in Australia for two years – has opposed the transfer of the company, which also involved the transfer of the non-competition clause. In short, Plaintiff took the position that the non-competition clause, as he had agreed with W., who has since passed away, cannot be transferred to a third party. The District Court did not share this opinion, as the agreement expressly stated that the plaintiff would comply with the non-competition clause vis-à-vis W or its successors in title. Therefore, according to the District Court, the third party was entitled to the contested non-competition clause.

The claimant also argued that the non-competition clause would be in conflict with Article 6 of the Competition Act, and this part in particular is interesting for the franchise practice. In short, this article stipulates that it is prohibited to enter into an agreement that has the object or effect of preventing, restricting or distorting competition on the Dutch market or part thereof. The claimant was of the opinion that this was the case, now that a reasonable term for a non-competition clause would have been two years, which had more than expired in the meantime. The Court did not share this opinion of the plaintiff either. The Court was of the opinion that in this matter what was important was what the competitive situation would have been like if there had not been a non-competition clause between buyer and seller. The Court was also of the opinion that the transfer of the company would then have been illusory. For example, after he had transferred the practice to W., the claimant could still have used his old clientele and the viability of W.’s new practice had been virtually nil. A non-compete clause in such a situation therefore guarantees the effectiveness of a transfer of a company, the Court held. The Court also considers that although the non-competition clause has now been entered into for a period of 10 years, the scope of the non-competition clause (only 9 kilometers around the general practice) is limited, so that the non-competition clause is not unnecessarily broadly formulated in that context either.

This statement is noteworthy. With regard to the duration of the non-compete clause, the Court rules that a duration of 10 years is not unnecessarily long. The European Commission, as evidenced by its Notice on restrictions directly related to and necessary to the implementation of concentrations (Notice of 4 July 2001), has stated that where there is a transfer of an undertaking involving goodwill but no know-how is transferred a non-compete clause can in principle apply for a maximum period of two years. For reasons of its own, the Court ignores this fact. It therefore depends on subsequent case law as to how this will ultimately be dealt with in practice.

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