Non-solicitation clauses in the context of M&A – New developments following the ECJ ruling

In a recent ruling on a reference for a preliminary ruling concerning the Portuguese football league, the ECJ has now, for the first time, set out fundamental guidelines for the assessment under competition law of non-solicitation agreements. Even without a direct link to a specific transaction, the ruling is of great significance for the practical drafting of non-competition and, in particular, non-solicitation clauses in corporate transactions.

Introduction

In our first article in this series, we explained that non-solicitation clauses in corporate transactions are increasingly coming under the scrutiny of competition authorities. The focus was on the European Commission’s (“Commission”) decision in the Delivery Hero v Glovo case from the summer of 2025, which made it clear that labour markets are treated as relevant competitive markets and that non-solicitation clauses can, in principle, be classified as restrictions on competition by object.

This article broadens the perspective: with the judgment of the ECJ of 30 April 2026 in the case of CD Tondela and Others, the Court has, for the first time, comprehensively addressed the classification of non-poaching clauses (so-called ‘no-poach agreements’ or, in this specific case, a non-poaching clause). Although the case originates from the world of professional football, the CJEU sets out general principles that are directly applicable to M&A transactions and confirm the principles that have applied to date.

Recent developments: the CJEU clarifies the competition law standards

In the CD Tondela case (see the CJEU’s press release and judgment in Case C-133/24), the CJEU examined an agreement between Portuguese professional football clubs in the 1st and 2nd divisions and the Professional Football League (LPFP), under which they undertook not to poach players who had unilaterally terminated their contracts due to the Covid-19 pandemic. The Portuguese competition authority had classified this agreement as a non-poaching clause and a restriction of competition on the transfer market. The clubs involved (including CD Tondela, which is still a Portuguese first-division club) and the LPFP lodged an appeal with the competent Portuguese court, whereupon the court referred the case to the ECJ due to doubts regarding its classification as a restriction by object and its lack of compatibility with the European prohibition on cartels.

In its judgment, the ECJ has now made the following key findings:

• A non-solicitation clause constitutes a manifest restriction on a parameter of competition which plays a significant role in the context of a highly skilled professional field – as is also (frequently) the case in the M&A context. Furthermore, there may be indirect and potential effects on the ‘purchase prices’ of employees (the CJEU refers to ‘human resources’ in this regard).
• Whether a non-solicitation clause is sufficiently harmful to be classified as an intended restriction of competition – in which case the effects are irrelevant – must be assessed in context. In this regard, specific circumstances (such as the Covid-19 pandemic and the sports market) may need to be taken into account, but do not justify a general exemption from the prohibition on cartels.
• Provided there is no intended restriction, a justification may be considered for a restriction that has been brought about. The ECJ requires a legitimate objective serving the public interest, as well as a thorough assessment of suitability, necessity and proportionality in the strict sense.
• An agreement may pursue, simultaneously, an objectively anti-competitive and an objectively pro-competitive objective (the restriction on the recruitment of players and the stability of the composition of teams/organisations). The overall assessment under competition law must be carried out by the competent Portuguese court; however, the ECJ recognises the specific circumstances of sport during the Covid-19 pandemic in this context.

Legal framework and risks

The ECJ thus essentially confirms the principles set out in the Commission’s decision in the Delivery Hero/Glovo case, which we discussed in our first article. This means that even in the case of non-solicitation clauses in business acquisition agreements, there may be a manifest restriction of a competitive parameter. The question of whether, and under what conditions, such a restriction can be justified must be examined in stages.

Is there a restriction on competition at all?

In an M&A context, a post-contractual non-competition clause, including a non-solicitation clause, may be classified as a permissible ancillary agreement to the acquisition of a business. According to the European Commission’s Notice on Ancillary Agreements, restrictions that are directly linked to and necessary for the implementation of a merger are not covered by the prohibition on cartels. The prerequisite is that the agreement is objectively necessary to protect the full value of the transferred assets and remains limited in time, scope and geographical area. More than mere expediency or economic utility is required. The restriction must be objectively necessary for the implementation of the transaction and the protection of the value of the transferred business.

Is there a potential breach of competition law?

If the prohibition goes beyond what is permissible as a ancillary agreement – for example, because it is too broadly defined, has an excessively long duration or is not related to the acquired business – it falls under the antitrust prohibition. The ECJ has now confirmed that a non-poaching agreement constitutes a manifest restriction of a parameter of competition, which is not aimed at restricting competition and is justifiable only in very limited exceptional cases. This is because ‘no-poach’ agreements affect not only sales markets but also competition for labour as an upstream procurement market, as the Delivery Hero v Glovo case illustrates.

Is justification possible?

If a clause is classified as a particularly harmful restriction of competition, justification is generally ruled out. By contrast, the justification referred to in the ECJ’s judgment—based on a legitimate objective serving the public interest, together with an assessment of suitability, necessity and proportionality—presupposes that the agreement is not, in fact, to be classified as an intended restriction of competition. In the context of M&A, the protection of the transaction value (goodwill, know-how, customer relationships, well-established teams) may constitute such an objective. However, this always requires a precise, transaction-specific justification, so it must be examined whether the protection of the transaction value might not be more easily achieved through an assessment of ancillary agreements. 

What companies should bear in mind

In transaction practice, this means that non-solicitation clauses or waivers of non-solicitation must be drafted and justified more precisely than ever before. Anyone relying solely on a broadly worded general non-solicitation clause runs the risk of breaching competition law, in particular the nullity and unenforceability of the clause in question, claims for damages and, in the worst case, even fines.

Transaction-specific justification

Every non-solicitation clause should have a clear link to the specific transaction: goodwill, know-how, customer relationships, key personnel, well-established teams or relationships with subcontractors. A broadly worded prohibition that is not tailored to the target company and the specific transaction-related parameters (which are precisely what are intended to justify the specific non-solicitation clause) runs the risk of being classified as unlawful under competition law. It may well also be advisable to restrict a non-solicitation clause to those individuals who are particularly worthy of protection (so-called ‘key employees’) and the management. In general, it is also advisable, in areas where, for example, certain professional groups have a particular influence as value-creating factors in the valuation of the target company, to spell this out clearly in the non-solicitation clause.

Time, subject matter and geographical limitations

The Notice on Ancillary Agreements provides for non-competition clauses for a period of up to two years (in the case of a transfer of business value only) or three years (in the case of an additional transfer of know-how) following completion of the transaction. The scope in terms of subject matter and geographical area must be limited to the target company’s current or, at the very least, specifically planned field and geographical area of activity. These limits apply equally to non-solicitation clauses as a specific form of non-competition clauses. For the specific issues relating to minority shareholdings, please refer to our first article.

Explicitly regulate non-solicitation clauses

Companies should not rely on a general non-competition clause to also provide protection against the poaching or poaching of employees. The better (and safer) practice is to expressly, precisely and narrowly define non-solicitation clauses in the purchase agreement. In particular, a distinction should be made between active poaching and mere recruitment: narrowly defined prohibitions on active poaching are generally less problematic than pure recruitment bans, which also cover unsolicited applications. In cases of doubt, uncertainties and overly broad wording or scope of application will work to the detriment of the user.

Define the group of parties bound by the clause narrowly

Particular care must be taken when determining the group of persons to be bound by the non-competition or non-solicitation clause. Under competition law, it must always be assessed whether binding the relevant party is justified by a legitimate interest and is proportionate. This applies in particular to indirectly involved persons. Group clauses and attribution mechanisms must be carefully examined to avoid imposing obligations on sister companies, fund structures or corporate bodies that have not themselves participated in the transaction value or have no influence over the business being sold.

Conclusion

The ECJ judgement fits seamlessly into the trend towards stricter enforcement of non-solicitation and non-competition clauses. It confirms that non-solicitation agreements constitute a manifest restriction of a parameter of competition, whilst at the same time providing nuanced criteria for the assessment and possible justification of such agreements. 

For M&A transactions, however, the Notice on Ancillary Agreements remains the key starting point: non-competition and non-solicitation clauses are only permissible insofar as they are directly linked to the execution of the transaction and are objectively necessary for this purpose. Once again, involving experienced advisers at an early stage helps to strike the right balance between legitimate transaction protection and compliance with competition law. What is decisive is not whether a clause appears useful in practical terms for the transaction, but whether, in the specific individual case, it is necessary, proportionate and supported by robust documentation.

(ECJ (Fifth Chamber), Judgment of 30 April 2026 – C-133/24)