Exclusive Distribution Agreement Competition Law Eu

Some selective distribution agreements are not entirely within the purview of competition law. The case law has confirmed that the prohibition of anti-competitive agreements under Article 101, paragraph 1, will generally not apply to a selective distribution system in which four conditions are met:2 The first step is to consider whether the agreement could benefit from the exemption provided in the Commission`s communication on minor agreements. This de minimis communication applies to agreements that do not contain specific restrictions and exist between SMEs or that involve larger firms for which the parties` combined market shares do not exceed certain thresholds. If the de minimis communication is not accurate, the next step will be to determine the market share held by the supplier and buyer in the market of this product. If the supplier and buyer`s market share for the products covered by the agreement does not exceed 30%, the agreement could, under certain conditions, be automatically exempt from category exemptions under the category exemption regulation. If the party`s share exceeds 30%, the agreement should be reviewed individually to determine whether it could benefit from an exemption. An agreement is excluded when it contributes to the improvement of production or distribution, promotes technical or economic progress, allows consumers to take a fair share of the benefits that flow from it, does not impose restrictions that are not essential to achieving these objectives, and does not exclude competition. The VABER contains a list of serious competition restrictions (so-called “hardcore”) that, if included, will remove the benefit of the class exemption from the agreement in its entirety. This does not necessarily mean that the agreement or the corresponding restrictions under Article 101, paragraph 2, are not applicable. There are two situations where this will not be the case, but both are difficult to apply in practice: most EU competition rules are transposed into UK legislation. In particular, beyond Brexit, the EU category exemption is maintained in UK law, which means that distribution agreements can continue to benefit from the category exemption for vertical agreements. Exclusive distribution: In an exclusive distribution agreement, the supplier undertakes to sell its products to only one distributor for resale in a specific territory. At the same time, the distributor is generally limited in its active sale in other areas (exclusively allocated).

Potential competitive risks include reduced intra-brand competition and market lockdown, which can facilitate price discrimination. If most or all suppliers apply exclusive distribution, this can soften competition and facilitate agreements at both supplier and distributor level. Finally, exclusive distribution can lead to the closure of other distributors and, therefore, to hinder competition at this level. “the limitation of active or passive sales to end-users by members of a selective distribution system operating at the retail level, without prejudice to the possibility of prohibiting a member of the system from operating from an unauthorized establishment.” On 3 March 2020, the Danish Maritime and Commercial Court found a drug distributor, CD Pharma AB, guilty of abusing its dominant position as early as 2014. Because of its dominant position, the company in question has a special responsibility not to harm competition – a liability that (…) In a decision of 16 March 2020 (unavailable on the date of the letter, see press release), the Authority fined Apple 1.1 billion euros for distribution practices of its products (excluding iPhones) in France. Wholesalers Tech Data and Ingram Micro were also fined 76.1 million euros and (…) In general, the parties are required to conduct their own analysis on whether their agreements can benefit from Article 101, paragraph 3, but the Commission has also adopted “cat exemption regulations”