Business Law Specialist Frank Scott-Ashe considers the recent High Court judgment in Spill Bidco Limited v Wishart [2025], which confirms that non-compete clauses in share purchase agreements can be breached by funding or assisting rivals, even without direct involvement.Contact Frank on 01225 462871 or complete the Contact Form below. |
Non-compete clauses are a familiar feature of many business sale agreements, but they are also one of the most misunderstood. Sellers often assume they can take a “hands-off” approach to new ventures after a sale, while buyers assume the clause gives them blanket protection against competition. The High Court’s decision in Spill Bidco Limited v Wishart [2025] is a timely reminder that non-compete obligations can be enforced – and that breaching them does not require running a rival business yourself.
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What was the dispute about?
The case arose from the sale of a business that manufactured and sold storage products. The seller entered into a share purchase agreement (SPA) with the buyer and also signed an investment agreement with another party. Both documents contained non-compete obligations designed to prevent the seller from engaging in competing businesses for a defined period after the sale.
Following completion, one of the group’s subsidiaries went into administration. Two former managers then set up a new company trading in similar products. Although the seller did not formally join the new business, his involvement went far beyond passive observation. He made payments to the former managers and to their new company, helped introduce new suppliers, and assisted another contact who went on to establish a further competing business.
The buyer brought proceedings, arguing that the seller’s conduct breached the non-compete restrictions in the SPA.
What did the court decide?
The High Court found in favour of the buyer. In doing so, it rejected the seller’s argument that he was neither “concerned in” nor “interested in” a competing business, and that simply lending funds could not amount to a breach.
The court took a practical, common-sense approach. It looked at what the seller was actually doing, not merely how he chose to describe it. While lending money in isolation might not always breach a non-compete clause, lending to individuals setting up a rival business – alongside making introductions and providing other forms of support – was found to cross the line. Taken together, the seller’s actions clearly amounted to involvement in competing businesses.
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The legal principles at play
Under English law, non-compete clauses are only enforceable if they go no further than is reasonably necessary to protect a legitimate business interest, such as goodwill. If a restriction is too wide in scope, duration or geography, it may be struck down as an unlawful restraint of trade.
However, where a clause is properly drafted and reasonable in context, the courts will enforce it. In Spill Bidco v Wishart, the seller did not succeed in arguing that the restrictions themselves were unenforceable. Instead, the focus was on whether his conduct fell within their scope – and the court had little difficulty concluding that it did.
Why this case matters for sellers
For sellers, this decision underlines the importance of taking non-compete obligations seriously. Many sellers assume that as long as they are not officially employed by or holding shares in a competing business, they are in the clear. This case shows that assumption can be dangerously wrong.
Financial support, introductions to suppliers, and behind-the-scenes assistance can all amount to being “concerned in” a competing business. Sellers should seek advice before providing any assistance to new ventures operating in the same market, even if that assistance feels indirect or informal.
Why it matters for buyers
For buyers, the case is a reassurance that well-drafted non-compete clauses do have teeth. It also highlights the importance of consistency. In Spill Bidco v Wishart, similar restrictions appeared across multiple documents, strengthening the buyer’s position.
Clear wording, reasonable limitations, and alignment across all transaction documents are essential. Buyers should also actively monitor compliance post-completion and be prepared to act if concerns arise.
Final thoughts
Spill Bidco Limited v Wishart is a clear warning that non-compete clauses are not mere boilerplate. They can and will be enforced where appropriate. Whether you are selling a business or acquiring one, careful drafting and a clear understanding of post-sale obligations are critical to protecting your position – and avoiding costly disputes down the line.
If you would like advice on non-compete clauses, share purchase agreements, or post-sale restrictions, BLB Solicitors can help you navigate these issues with clarity and confidence.