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“Non-Compete Agreements” within Mergers and
Acquisitions
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Prof. Dr. H. Ercument Erdem
Non-compete agreements are frequently used in merger or acqui-
sition transactions. These agreements are mostly necessary to ensure
the attainment of the desired results from the merger or acquisition
transaction. Hence, in acquisitions, in order to ensure that the value of
the right or asset acquired is fully transferred to the buyer, the seller
might have to be placed under an obligation not to compete with the
buyer for a certain period. This requirement may come up particularly
in relation to building up a clientele and sufficiently exploiting the
know-how acquired.
Definition of the Non-Compete Competition
Non-compete agreements are ancillary restraints. Ancillary
restraints are restraints which are directly related to the concentration
and which are necessary to the implementation of the transaction and
to fully achieving the objectives envisaged by the merger or acquisition
transaction.
Ancillary restraints are actually agreements which aim to prevent
or restrict competition as per Article 4 of the Act on the Protection of
Competition No. 4054 (“Competition Act”) and are thus illegal.
Nevertheless, non-compete agreements within mergers and acquisi-
tions in compliance with the European Community Regulations are
assumed as required ancillary restraints for the fulfillment of the results
of said transaction and are thus allowed under certain conditions.
Legal Framework
There is no regulation under the Competition Act regarding ancil-
lary restraints. Nonetheless, the Communiqué Concerning Mergers
and Acquisitions Calling for the Authorization of the Competition
COMPETITION LAW
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Article of December 2012