Concurrence Déloyale

In Mauritius, the general proposition is that competition is free unless regulated by the law. This invariably entails the obvious proposition that it is perfectly acceptable for a business economic activity to adversely affect a competitor. However, it is permissible for employers to protect themselves and their interests against any forms of unfair competition from their ex-employees. This is done through a restrictive covenant, usually a specific clause in the contract of employment, that will regulate the employee’s conduct post termination.

Leading case law

The landmark case on “concurrence déloyale” is L’Acropole Ltd. v Gerbe D’or Ltd 1982 MR 153 where the main issue was whether a former employee of a bakery (L’Acropole) could, after resigning from the latter, open and operate a pastry factory almost next door. The Supreme Court refused to grant an injunction preventing the respondents from operating their new business and held that the freedom of the respondents to run a business weighed more than the rights of the applicant to be protected in its own business and any unlawful damage, should the competition turn out to be unlawful, best be compensated by damages.

In Demoiselle Coccinelle Ltd v Peerboccus N. & Anor 2017 SCJ 140, the Court confirmed that it will not intervene if alleged confidential information is not exclusive to a person or company and is readily and publicly available. Even if, the contract of employment contains an express term prohibiting the disclosure or use of confidential information after the termination of employment, the employer would have to establish that the information sought to be protected is in the nature of a trade secret and is not public and easily available.

Requirements to be satisfied for a restrictive covenant

For a restrictive clause to be valid, it has to satisfy the conditions which has been established in Narbidas Ltd v Coombes M 2019 SCJ 142, namely:

• The restrictive covenant should be restricted in time and space;
• The restrictive covenant should not be too wide in scope as to prevent the employee from earning a living; and
• Its maintenance should be fundamental to protect the legitimate interest of the business of the employer.

As such, the restrictive clause must not be too wide geographically or in duration. As for the duration, our Courts have more than once found a duration of one year to be reasonable.

Our Courts have also held that it is not necessary for an employer who is enforcing a restrictive covenant to provide financial compensation to the ex-employee. In Nabridas the Supreme Court explained that: “The requirement for a “contrepartie financière” in a restrictive covenant, undoubtedly renders the enforcement of a restrictive covenant more just and equitable inasmuch as it provides financial security to the employee during the period that he is prevented from working under the terms of the covenant. However it is clear that such “contrepartie financière” does not form part of our jurisprudence. It is based on the provisions of the Code de Travail in France and cannot be imported wholesale into our law”.

Recent case law

In Pigeot S & Anor v Berque Ltd 2022 SCJ 208, the Supreme Court, sitting in its appellate jurisdiction upheld the established principle that an employee owes throughout his employment “une obligation de loyauté et de fidélité” ie a duty of loyalty to his employer even in the absence of any specific clause to that effect in the contract of employment inasmuch as any breach of such “loyauté” would constitute “une faute grave ou lourde”. The Supreme Court, sitting in its appellate jurisdiction, further held that the court is entitled to make a global estimate of the damages in a case of “concurrence déloyale” without the necessity to give a precise breakdown of the constitutive elements.

Conclusion

Clearly, the approach of the Supreme Court is to achieve a balance in the interests of the employer and the employee and the need to maintain a healthy competition in the market whether within the business or the employment environments.