A post-termination non-compete obligation imposed on an agent which complies with the Civil Code must also be assessed under competition law. We discussed the Civil Code requirements in our earlier article.
❗ The level of competition law risk may depend on whether the relationship is a “genuine agency”: one in which the agent bears no significant financial or commercial risk.
📌 Determining whether an agency is genuine requires analysing all the economic aspects of the relationship between agent and principal. Remember that the concept of genuine agency originates in EU law and has no explicit basis in Polish law, although there is a significant likelihood that the Polish competition authority, UOKiK, or Polish courts will apply it.
📌 If the agent bears significant financial or commercial risk, competition law treats them as an independent distributor. In that case, a post-termination non-compete obligation carries a high risk of infringing competition law if any of the following conditions is not met:
➡️ the restriction is necessary to protect significant, confidential know-how transferred to the agent by the principal;
➡️ the restriction is limited to the point of sale from which the agent operated during the agreement;
➡️ the restriction lasts no longer than one year after the agency agreement ends.
📌 In a genuine agency, the risk of challenging a non-compete obligation that fails any of these conditions is somewhat lower, but still exists. Defending its legality requires justification based on the particular circumstances, such as the exceptional importance of the know-how transferred or substantial integration of the agent’s activities into the principal’s organisation during the agreement.
🚫 In every case, a post-termination non-compete obligation should be limited to the geographical area in which the agent operated during the agreement and strictly to the goods or services covered by the agent’s activities.
⚠️ Assessing competition law risk will always require analysing the economic conditions of the relationship between agent and principal, the principal’s market power and the characteristics of the market in which they operate.
