The “ancillary restraints” doctrine, originally developed by the European Commission, serves to validate restraints that are objectively necessary to implement a legitimate transaction which has neutral or positive effects on competition. It is therefore relevant to restrictions that are directly related to, and necessary for, the implementation of a concentration. To which extend ancillary restraints are permissible in the context of economic concentrations as well as the detail of regulations varies significantly across jurisdictions in the MENA region. Egypt, has recently issued dedicated guidelines on ancillary restraints. In contrast to Morocco, Jordan, and Tunisia do not provide specific guidance on ancillary restraints and address such them within the broader framework of anticompetitive effects analysis. This client brief provides and overview of the regulations in key jurisdictions in the Levant and North Africa.
Egypt
The Egyptian Competition Authority’s (ECA) Guidelines on Ancillary Restraints, establish a structured framework for assessment. For a provisions to qualify as potentially permissible ancillary restraints, three conditions must be met commutatively. They must be:
- directly related to the implementation of the concentration in an objective perspective;
- necessary for the implementation of the concentration meaning that without it the transaction cannot be implemented; and
- sufficiently proportionate in terms of duration, geographic scope, and object.
As a generally guiding principle for the assessment of ancillary restraints, the Guidelines provide that restrictions protecting the buyer and ensuring the transfer of the full value of the target are more readily accepted as ancillary restraints. Restrictions benefiting the seller, on the other hand, are subject to stricter scrutiny and must be more narrowly tailored in scope and duration.
Pursuant to the Guidelines common forms of ancillary restraints include non-compete clauses, non-solicitation obligations, confidentiality undertakings, purchase and supply obligations, and certain licensing arrangements. Highlighting the assessment of non-compete clauses, the Guidelines recognize two forms of non-compete clauses: (1) vertical non-compete clauses, arising in supplier–distributor type relationships; and (2) horizontal non-compete clauses, arising between parties at comparable market levels, including in exit or restructuring transactions and in contexts involving the protection of confidential information or know-how.
In all cases, the ECA applies a proportionality test to assess whether such clauses qualify as permissible ancillary restraints. In assessing the appropriateness of the duration of a restraint provision, the ECA relies on a discretionary and sector-based analysis, considering factors such as the time needed for entry of new products/brands and consumer acceptance. For instance, in acquisitions the Guidelines distinguishes between: (1) transfer of goodwill alone, which typically justify only shorter durations of restrains; and (2) transfer of goodwill combined with know-how, which could justified longer durations. This approach broadly aligns with the EU framework, although Egypt does not apply rigid safe harbour provisions. In the context of joint ventures, non-compete obligations may, where justified, last for the duration of the joint venture, provided they remain strictly limited to its geographic scope.
As regards geographic scope, to avoid geographical segmentation, non-compete obligations are generally limited to the territories in which the seller previously operated the transferred business, although they may exceptionally extend to areas where concrete expansion steps had already been undertaken.
The Guidelines further require objective justification, particularly in relation to the protection of confidential information and know-how, and limit restrictions to activities forming part of the concentration.
Moreover, non-compete clauses are only permissible where acquisition of control or material influence is concerned. Purely passive financial investments are generally considered outside the permissible scope of ancillary restraints.
These requirements operate alongside the broader ancillary restraint test and are applied on a case-by-case basis, taking into account the nature of the transaction, including acquisitions and joint ventures. The ECA also considers whether the non-compete is necessary to ensure the viability of the concentration, with the analysis varying depending on transaction structure.
Morocco
Morocco does not recognise a standalone ancillary restraints doctrine. Instead, transaction-related restrictions are assessed within the merger control and general competition law framework, primarily by reference to their potential anti-competitive effects on the relevant market. The Moroccan Competition Council (MCC) examines whether such restraints may prevent, restrict, or distort competition, including through market foreclosure, limitation of market entry or expansion by competitors, or reduction of competitive pressure on the merged entity.
In practice, ancillary-type restraints are generally tolerated only where they are directly linked to the concentration and do not exceed what is necessary to achieve its legitimate objectives, such as protecting transferred goodwill or enabling the effective transfer of a business. Where a restraint goes beyond what is necessary, it may be assessed independently under general competition law rules and potentially qualify as a restrictive practice. In particular, where it leads to market allocation, excessive exclusion of competitors, or unjustified limitation of economic activity.
Jordan
As Morocco Jordan does not recognise a formal ancillary restraints doctrine. However, ancillary-type restrictions are implicitly addressed within the general merger control framework. Under the Jordanian merger control regime, parties are required to submit all transaction related agreements, which may include agreements containing non-compete clauses, transitional arrangements, or licensing arrangements.
Such restraints are assessed on a case-by-case basis by reference to (1) whether they are necessary or indispensable for its implementation of the transaction, and (2) proportionate in duration, geographic scope, and subject matter. Restraints exceeding these limits may be subject to scrutiny under the general prohibition of anti-competitive agreements.
While Jordan does not provide a formal safe harbour for ancillary restraints, such clauses are likely to be assessed through an implied necessity and proportionality analysis within merger review.
Tunisia
Similarly, Tunisia does not formally recognise ancillary restraints as a concept. Instead, transaction-related restrictions are assessed within the general merger control framework through an effects-based analysis focusing on their impact on competition in the relevant market. In practice, consideration is given to whether the restriction is necessary for to the implementation of the transaction and proportionate. Such assessment is conducted on a case-by-case basis under general competition law principles.
Take away
The treatment of ancillary restraints in economic concentrations reveals a clear regional divide. Egypt has adopted a more structured approach by expressly recognising ancillary restraints and establishing proportionality-based criteria. Morocco, Jordan, and Tunisia, on the other hand, continue to evaluate transaction-related restrictions through general competition law principles and effects-based analysis. Despite these differences, a common thread runs through all four jurisdictions: restraints will generally be accepted only where they are directly linked to the transaction, objectively necessary for its implementation, and limited in scope and duration.
AUTHOR
Seifeldin Sameh
