Non-compete clauses are commonly included in M&A agreements.
Although generally recognized as lawful, non-competes must fulfill
certain requirements to comply with antitrust and competition laws.
A recent FTC enforcement action further clarifies these
requirements for the U.S., and serves as a reminder that U.S.
antitrust authorities are actively reviewing these provisions.
In January 2019 NEXUS Gas Transmission LLC entered into a
Purchase and Sale Agreement (PSA) to acquire Generation Pipeline
LLC, a 23-mile natural gas pipeline in the Toledo, Ohio area, from
a group of sellers for $160 million.
In the Complaint and Proposed Consent announced on September 13,
2019, the Federal Trade Commission (FTC) took issue with the
non-compete clause in the PSA, which would have prohibited one
seller, North Coast Gas Transmission (NCGT), from competing with
the Generation Pipeline for three years. NCGT not only holds a
minority interest in the Generation Pipeline, but also
