It can be, unless it fits a specific statutory defence — an agreement between competitors not to compete is a criminal offence on its own wording.
Short answer
It can be. Section 45 of the Competition Act makes it a criminal offence for competitors to agree not to compete, and a non-compete between a buyer and seller who competed with each other before the deal falls squarely inside that wording. It escapes prosecution only if it qualifies for the ancillary restraints defence in section 45(4), which requires the restraint to be directly related and reasonably necessary to the sale itself.
The Competition Act, not just the common law, governs a non-compete between people who competed with each other. Section 45(1) states it plainly: “Every person commits an offence who, with a competitor of that person with respect to a product, conspires, agrees or arranges” to fix prices, allocate markets, or restrict output. The penalty is real: conviction carries, in the Act’s own words, “guilty of an indictable offence and liable on conviction to imprisonment for a term not exceeding 14 years”.
A vendor non-compete that clears the ordinary common-law reasonableness test — limited in time, geography and scope — can still be, on its face, exactly this offence, because the buyer and seller were competitors before the deal closed. The statute does not carve out sale non-competes; it leaves them to the defence below.
Section 45(4) supplies a defence, not an exemption: no one shall be convicted if they establish, on a balance of probabilities, that “it is ancillary to a broader or separate agreement or arrangement that includes the same parties” and that it is directly related to, and reasonably necessary for giving effect to, that broader agreement’s objective — and the broader agreement itself does not independently break the same rule. A non-compete genuinely tied to, and no broader than, the sale of the business is the textbook case the defence exists for.
The defence narrows fast outside that fact pattern. A restraint broader than what the sale needs — longer than any legitimate protection period, covering territory or products the seller never actually competed in, or extending to people who were never party to the sale — falls outside “reasonably necessary” and loses the defence, leaving the plain wording of section 45(1) exposed.
In the Case Files library, a sale non-compete that needed the ancillary restraints defence is the direct example: a specialty-manufacturer sale non-compete that was reasonable at common law and still needed the section 45(4) defence, because buyer and seller had been competitors for a decade. a non-compete the spouse signed but was never paid for shows the separate, more common failure mode for a sale non-compete — not a criminal-law problem, but a plain contract-formation one.
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