Distribution Agreements under EU Law: What You Need to Know
Distribution agreements are commonly used in business to set out the terms and conditions for the sale and distribution of products or services. They are essential in ensuring a smooth and efficient distribution process. However, when it comes to distribution agreements under EU law, there are some important considerations to keep in mind.
In this article, we will discuss the key aspects of distribution agreements under EU competition law and how to ensure compliance with the relevant regulations.
EU competition law and distribution agreements
The EU competition law aims to promote fair competition in the EU market by prohibiting agreements that restrict competition. This includes distribution agreements. Under EU law, a distribution agreement is deemed anti-competitive if it has the potential to limit competition in the market, either by preventing new players from entering or by limiting consumer choice.
As a result, EU law requires that distribution agreements must comply with certain requirements to avoid being deemed anti-competitive. These requirements are designed to ensure that the agreements do not restrict competition in the market.
Key requirements of distribution agreements under EU law
1. Non-exclusivity
To avoid competition concerns, distribution agreements should not be exclusive. This means that the distributor is not the only party that is allowed to sell the products or services in a particular market. Non-exclusivity is important as it allows other players to enter the market and compete with the distributor.
2. Territorial restrictions
Territorial restrictions can also be a concern for competition authorities under EU law. For instance, a distribution agreement that limits the distributor`s ability to sell products or services in a particular region can be considered anti-competitive if it has the potential to hinder competition.
3. Price restrictions
Price restrictions can also be a concern under EU competition law. For instance, if a distribution agreement includes a minimum resale price, this can be deemed anti-competitive as it restricts the distributor`s ability to set prices and compete with others in the market.
4. Safeguards against resale restrictions
Finally, distribution agreements must include adequate safeguards to prevent the imposition of resale restrictions. Resale restrictions that prevent the distributor from selling to customers outside of a particular territory are considered anti-competitive under EU law.
Conclusion
Distribution agreements are important for businesses that want to ensure a smooth and efficient distribution process. However, it is important to ensure that the agreements comply with the relevant EU competition law regulations to avoid being deemed anti-competitive.
This means that non-exclusivity, territorial restrictions, price restrictions, and safeguards against resale restrictions must be carefully considered when drafting distribution agreements. To ensure compliance with EU law, it is important to consult with a legal expert experienced in competition law.