The Scope of Non-Competition Agreements in Business Acquisitions

Non-compete agreements are a key tool for protecting the acquirer in business acquisition transactions, especially when the customer base or know-how is part of the value of the business being transferred. In an article published in Cinco Días, Alejandra Lorente, an attorney in the litigation and arbitration practice area, analyzes the scope of these clauses in light of Supreme Court Ruling 17/2026 and emphasizes that “the mere inclusion of these clauses does not guarantee their effectiveness,” since their scope depends “crucially on their wording and judicial interpretation.”

The expert explains that the ruling highlights how “a strictly literal interpretation can influence the outcome of high-stakes litigation,” defining the scope of these agreements with respect to both protected clients and corporate groups. In this regard, the Supreme Court concludes that the restriction applies only to clients expressly defined in the contract and refuses to automatically extend it to all companies within a business group, holding that “each entity constitutes an autonomous entity, with its own commercial relationships and distinct clientele.”

Finally, Alejandra Lorente emphasizes that the ruling offers “a clear lesson”: “the scope of contractual clauses is determined not by the parties’ intent, but by their actual wording.” Consequently, she highlights the importance of precise wording in non-compete agreements to ensure legal certainty in this type of transaction.