A New Sheriff In Town: FTC Bans Non-Competes In First Competition Rulemaking

For the first time in its history, the US Federal Trade Commission issued a final rule governing unfair methods of competition. In line with its ambitious approach towards its Section 5 enforcement, the FTC will ban almost all non-compete agreements between employers and employees—if the rule survives legal challenge. We discuss what dealmakers need to know about this new rule and how non-competes are treated around the world.

What does the rule cover?

With very limited exceptions, the final rule invalidates existing non-competes and prohibits employers from entering into new non-competes with employees for all businesses under the FTC's jurisdiction. The key exception for dealmakers is the bona fide sale of a business exception.