Tracing the Dialogic of Guidance Note vis-à-vis Non -Complete Clause in M&A

Saloni Jain
DES Navalmal Firodia Law College, Pune, India.

Volume III, Issue VI, 2020

The acquirer purchases the business from seller in exchange of grand amount. But, what happens if the seller rebuilds new business with the same methodology giving highly competitive edge to the acquirer? For such instance non-compete restrictions come into existence. Unfortunately, in India these restrictive clauses were anti-competitive in nature according to Competition Act, 2002. Because of this the acquirer was unable to confidently step into the shoes of seller. Thus, very recently the clause became enforceable and competition commission issued guidance note laying down duration and approved self-assessment scope of non-compete restriction considering duration, subject matter and geographical limitation. In the paper the author endeavors to systematically analyze topical relevance of non-compete clause by narrating the following details interplay role of NRC in M&A, exploring the scope, decoding past judgments, risk reducing advice for companies, analysis and conclusion.

Keywords – Competition Commission of India, Guidance Note, Non-Compete Restriction, Merger and Acquisition, Competition Act 2002, sec 27 Indian Contract Act