On 18 June 2012, the European Commission (EC) provided guidance on how it treats non-compete covenants entered into in the context of a joint venture (JV). JV arrangements between Areva and Siemens concerning nuclear technologies had included non-compete obligations on the parents that would apply for up to 11 years after the end of the JV. Following an investigation, the EC found that one element of this, a restriction on Siemens from competing on markets on which the joint venture had acted only as re-seller of Siemens’ products, could not be justified post-termination. For markets on which the JV had sold its own products, the EC found that the non-compete clause was acceptable, but only for three years post-termination. The same applied to related confidentiality clauses insofar as they had the same effects as the non-competes. The case was closed after Areva and Siemens agreed to change the arrangements to reflect these concerns.
The acceptable period for a JV non-compete (as with all similar clauses) is dependent on the facts of the case, but this investigation nevertheless provides useful guidance as to the EC’s thinking on this issue.