Nothing to Lose but Their Restraints of Trade: Lessons for Employment Non-Compete Clauses from EU Competition Law

Abstract

Abstract Courts on both sides of the Irish Sea have handed down significant judgments in the field of post-employment restrictive covenants in recent years. This article argues that these cases expose the common law rules on restraint of trade as fundamentally inadequate for regulating non-compete clauses in the modern economy. Ultimately, the scope of these restrictive covenants can only be determined by examining the nature of the relevant market and defining the previous employer’s competitors. This article argues that courts should make full use of methods developed by EU competition law to define the limits of the relevant market, identify the competitors of the previous employer and assess the scale of the restraint. Although this method cannot fully determine the reasonableness of a non-compete clause, it would lead to more effective and systematic treatment of non-compete clauses that considerably improves upon the pragmatic and incompletely theorised approach currently taken by courts in both Ireland and the UK.