Irish Competition Authority Decisions

1. An agreement between Brian Moran, Jean Moran, Alan Dargan, Peter Dargan and Michael Dargan (the vendors) and Hewetts Travel Agency Limited (Hewetts) containing a non-compete clause pursuant to the sale of the entire share capital of Universal Travel Agency Limited (Universal) was notified to the Competition Authority on 30 September 1992. The notification requested a certificate or, in the event of a certificate being refused, a licence.

2. The notification relates to an agreement dated 10 December 1990 between the vendors and Hewetts whereby the vendors agree to sell the entire issued share capital of Universal to Hewetts. The agreement also contains a non-compete provision.

3. Universal Travel Agency Limited is a limited company operating as a travel agency and engaged in the package tour/holiday business. At the time of completion of the agreement, Brian Moran, Jean Moran, Alan Dargan, Peter Dargan and Michael Dargan (the vendors) were the collective beneficial owners of Universal. Hewetts Travel Agency Limited also operates as a travel agency engaged in the package tour/holiday business.

4. The notification relates to an agreement, dated 10 December 1990, for the sale of the entire share capital of Universal to Hewetts. The agreement contains a non-compete clause preventing the vendors from becoming involved in the business of travel agents or tour operators for a period of two years from the date of completion. This period expired on 10 December 1992.

5. Section 4(1) of the Competition Act states that 'all agreements between undertakings, decisions by associations of undertakings and concerted practices which have as their object or effect the prevention, restriction or distortion of competition in trade in any goods or services in the State or in any part of the State are prohibited and void'.

6. Section 3(1) of the Competition Act defines an undertaking as ´a person being an individual, a body corporate or an unincorporated body of persons engaged for gain in the production, supply or distribution of goods or the provision of a service.' The parties to the present agreement are the vendors and Hewetts. Hewetts are engaged for gain in the provision of travel agency services. The vendors were similarly engaged for gain at the time of the agreement through their ownership of Universal. They were undertakings at the time of the agreement. This is consistent with the Authority's decisions in ACT/Kindle and Scully/Tyrrell. [1]

7. As the sale of business was completed prior to 1 October, 1991, the date on which the Competition Act came into force, this element of the agreement had been discharged by performance before the Act commenced. The property which was the subject of the agreement had been transferred. In the Authority's view, the prohibition in Section 4(1) only applies to a current or continuing contractual commitment or one entered into subsequent to the coming into force of the Act [2]. As the merger or sale element of the 1991 transaction was discharged prior to the commencement of the Act, that aspect of the arrangements does not come within the scope of Section 4(1).

8. The non-compete clause has expired so there is no longer any restriction on the vendors.

9. In the Authority's opinion, Brian Moran, Jean Moran, Alan Dargan, Peter Dargan and Michael Dargan and Hewetts Travel Agency Limited are undertakings within the meaning of Section 3(1) of the Competition Act, and the notified arrangements for the acquisition of the business of Universal Travel Agency Limited by Hewetts, constitute an agreement between undertakings.

10. The Authority believes that as the sale element of the transaction was discharged prior to the commencement of the Competition Act, the agreement for the purchase and sale of Universal does not come within the scope of Section 4(1) of the Act. As the non-compete clause has expired, there is no longer any restriction on the vendors and, consequently, the agreement does not offend against section 4(1).

11. The Competition Authority has issued the following decision:

The Competition Authority certifies that in its opinion, on the basis of the facts in its possession, the agreement between Brian Moran, Jean Moran, Alan Dargan, Peter Dargan and Michael Dargan and Hewetts Travel Agency Limited for the purchase and sale of the entire share capital of Universal Travel Agency Limited (notification no. CA/108/92E), notified on 30 September 1992 under Section 7 does not offend against Section 4(1) of the Competition Act, 1991.

For the Competition Authority

Patrick Massey

Member

1 July 1993