Non-compete clauses in JV contracts: analysis from perspective of PRC anti-monopoly law

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By Liu Cheng, Yu Zhenzhen and Swita Gan

Non-compete clauses (NCCs) are very often included in joint venture (JV) contracts in the course of JV establishment. NCCs normally operate to prevent JV parties from engaging in business in competition with the JV entity, for a specified period and within a specified geographical area.

The PRC anti-monopoly law (AML) came into effect in 2008 and since then PRC competition authorities have issued a number of rules and regulations in connection with the AML. However, none of these rules and regulations (including the AML itself) set forth specific provisions regarding the regulation of NCCs in JV contracts. As such, this article considers the legality of NCCs under the AML and the basic principles for the negotiation of NCCs in JV transactions…

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