The Dutch Court of Appeal has held that a post-term restriction on a managing director in a relationship agreement did not infringe the Dutch Competition Act. The clause had insufficient effects on the market on the facts.
The Court of Appeal has confirmed the judgment of the Lower Court dated 8 February 2012. The case involved a 'relationship clause' incorporated into an employment contract between a company and its managing director. The clause provided that the employer could spend one day a week, during working hours, working at a company that he had established in Belgium.
However, in the event that the employee intended to work for the company in Belgium after termination of his employment, he needed his employer's consent, which was not to be unreasonably withheld. The managing director alleged that the relationship clause breached Clause 6 of the Dutch Competition Act. The court concluded that such an agreement had the potential to infringe the Competition Act, but did not do so on the facts.
The Court noted that an employee non-compete clause can indeed be seen as an agreement between two companies in the event that: (i) the employee became an entrepreneur; and (ii) the clause relates to the period after termination of the contract.
However, in this case the clause did not have a sufficiently material effect on the market. Moreover, as the former director knew all of his clients, the former director would have had a competitive advantage if the non-compete clause had not been incorporated in the contract. The clause was therefore legitimate and not disproportionate.
Hence, the Court of Appeal upheld the judgment and rejected the arguments of the managing director. Source: www.rechtspraak.nl, case number: LJN BZ1968, 19 February 2013.