WRITTEN QUESTION E-1637/02 by Riitta Myller (PSE) to the Commission. Non-competition agreements and freedom of movement.
Date: 2002-06-10
Institutions: European Parliament, Provisional data
Subjects: competence of the Member States, competition, free movement of workers, freedom to provide services, infringement of EU law, principle of proportionality, restriction on competition, unfair terms of contract, work contract

17.4.2003

EN

Official Journal of the European Union

C 92 E/75

(2003/C 92 E/076)

WRITTEN QUESTION E-1637/02

by Riitta Myller (PSE) to the Commission

(10 June 2002)

Subject: Non-competition agreements and freedom of movement

The purpose of an agreement prohibiting competition between an employer and an employee is to protect
the employer’s knowledge and know-how relating to product development, research and similar matters
from competitors and to ensure that the interests of employer and employee are respected, in a more
impartial manner.

However, such agreements are now widely used for work in respect of which there is no need to protect
the employee’s position, his duties or information required for the employing firm’s activities. They are
often valid for a long period and often contain severe penalty clauses to ensure compliance. The
agreements also often impose unreasonable demands and conflict with the Community law principle of
proportionality.

Agreements prohibiting competition restrict the employee’s right to move into the service of another
employer, and hinder freedom of movement, since the employee is unable to found his own firm in the
same area. They thus impede in a general way the free movement of workers and services from one
Member State to another. National legislation on the admissibility of such agreements varies considerably
within the EU. The restrictions imposed by agreements prohibiting competition therefore mean that
workers in the Member States have differing attitudes towards moving between Member States for job
application purposes and to work. This leads to inequalities between workers from different Member
States.

What measures does the Commission propose to take to harmonise the provisions of agreements
prohibiting competition and to correct the above-mentioned undesirable state of affairs?

Answer given by Mr Monti on behalf of the Commission

(11 July 2002)

There is no European legislation dealing specifically with non-competition clauses between employer and
employee after the end of their contract. The Commission has no plans to make proposals for legislation
in this respect.

The vast majority of the clauses referred to by the Honourable Member cover employers and employees
within a Member State. In that case the Community rules on the free movement of workers and services
do not apply. These clauses concern primarily contract law issues which are governed by Member States’
law. However,
it is obvious that any restrictions, for example those resulting from the differences in
legislation, may have cross-border consequences. The issue of whether a particular clause is
national
compatible with the Community rules on free movement of workers under Article 39 of the EC Treaty
and/or the freedom to provide services under Article 49 of the EC Treaty should be examined on a case-by-
case basis.

As regards free movement of workers, it is important that a balance exists, on the one hand, between the
fundamental rights of a worker to work and to exercise his right to free movement and, on the other hand,
the right of the employer to protect his legitimate interests against competitors. When such a balance
exists and the clause is proportionate to its aim and does not unnecessarily limit the right of the worker to
free movement, the clause seems not to be contrary to the provisions of free movement for workers within
the Community. In this respect, reference should be made to the case-law of the European Court of Justice
in the Bosman-case (1) in which the Court held that measures which constitute obstacles to the free
movement of workers would not be contrary to Community law if they pursued a legitimate aim
compatible with the EC Treaty and were justified by pressing reasons of public interest and, moreover,
were in line with the principle of proportionality.

A particular clause which has a disproportionate effect on a person’s ability to seek employment may well
amount to a barrier to the provision of services under Article 49 of the EC Treaty as well (e.g. in the case
where a company which operates in the high-tech sector needs to recruit a highly qualified person to be
able to provide its services). Any rules that may hinder or make less attractive the exercise of a

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17.4.2003

freedom guaranteed by the EC Treaty, such as the freedom to provide services must,
fundamental
according to the established case-law of the Court of Justice, fulfil certain requirements (2). There are four
such requirements: they must be applied in a non-discriminatory manner; they must be justified by
imperative requirements in the general interest; they must be suitable for securing the attainment of the
objective which they pursue; and they must not go beyond what is necessary in order to attain it.

It is for the national authorities to apply the said criteria in individual cases and the question of the
compatibility or otherwise of an agreement with the said criteria is a matter for the national courts to
assess in the light of Community rules and principles on free movement of workers and services.

As regards the competition rules of the EC Treaty, the agreements mentioned by the Honourable Member
would fall under these only in very exceptional cases, provided that they constitute an implementation of
an agreement between undertakings. These rare cases would be addressed by the Commission individually.

(1) Case C-415/93, Bosman, ECR 1995, page I-4921.
(2) See, for example, case C-55/94, Gebhard, ECR 1995, I-4165.

(2003/C 92 E/077)

WRITTEN QUESTION E-1640/02

by Alexander de Roo (Verts/ALE) to the Commission

(10 June 2002)

Subject: Liberty Media’s significant market share following the possible take-over of Casema in the

Netherlands

It was recently reported that France Telecom was in exclusive negotiations with the US cable giant Liberty
Media on the take-over of France Telecom’s Dutch cable subsidiary Casema. With 1,3 million connections,
Casema is the third largest cable provider in the Netherlands. A successful take-over would give Liberty
Media about a 60 % share of the Dutch cable market, as it already has a controlling stake in the
Netherlands’ largest cable operator, UPC (2,2 million connections).

Liberty Media also has interests in various television programme providers. The company would be in a
position to exploit any significant share of the cable market in favour of its associated providers. Many
television broadcasters already find themselves in a difficult negotiating position when it comes to getting
their programmes shown. They are afraid of unfair competition for slots on the cable.

All in all, Liberty Media is threatening to repeat in Europe what it has already done in the United States.
There the company bought up ailing cable firms in the 1970s and thus acquired a monopoly position.
Earlier the German competition authority, the Kartelamt, prevented Liberty from acquiring too strong a
position on the German cable market and it is anticipated that the Netherlands competition authority Opta
will also view the take-over plans critically. It may be time for the Europe authorities to keep their finger
on the pulse.

In view of this situation, can the Commission provide answers to the following questions:

1. How can the European Commission guarantee healthy and competitive operating conditions on the

European market for cable services in the future?

2. What is the Commission’s view of the push by non-European cable operators, such as the US Liberty

Media, and the large market share that they may acquire in some EU Member States?

3. Does the Commission consider a 60 percent market share to be in breach of European regulations

and, if so, is it prepared to refer the possible take-over of Casema to the Dutch authorities?