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Favour for a friend cost 250,000 Swedish kroner

July 2011 - EU & Competition. Legal Developments by Norrbom Vinding Law Firm, member of ius laboris.

More articles by this firm.

A former business co-owner had to pay for helping out a competitor. Also even though there was no money in it for him.

When business co-owners transfer their stake in a business, it is standard practice for them to sign a non-compete clause to prevent them from assisting competitors for a certain period after the transfer. Such a clause was breached by a business co-owner in this case from the Copenhagen Maritime and Commercial Court.
”… I send you drawings of a number of standard items. Verner want you to examine these and see if you will be able to copy them …” So wrote a former business co-owner to a factory in India. The email was sent 1 year and 9 months after he had sold his stake in a Danish scaffolding business.
The email ended up at his former business by mistake. They were astonished. Not only did the email contain drawings and technical specifications, it had also been sent on behalf of their main competitor. It was a flagrant breach of the 2-year non-compete clause which the former co-owner had signed in connection with the transfer.
The former co-owner disagreed. He had sent the email on behalf of a good friend, who was away travelling. Although he had added some information, he had not gained anything financially from it. He had done it simply as a favour. Therefore he was not in breach of his non-compete clause. Additionally, he pointed out, the non-compete clause had almost expired.
Clear breach
The Court held that the former co-owner had acted in breach of his non-compete clause. In so holding, the Court took into account that it must have been clear to him that he was assisting a competitor, and whether or not a fee was paid for his services was not important in that connection.
On those grounds, the former co-owner was ordered to pay the SEK 250 000 penalty stipulated in the non-compete clause.
Norrbom Vinding notes:
  • that the case illustrates that no fee needs to be involved in order for an act to be deemed to constitute competition in breach a non-compete clause.
The above does not constitute legal advice and should not be relied upon as such

For more information please visit www.norrbomvinding.com