2 Restrictions on the territory in which the buyer is allowed to sell or the customers to whom the buyer is allowed to sell This restriction concerns the distribution of the market by region or by customer. Traders must be free to choose where and to whom they sell. However, restrictions are allowed for "active sales" in an area reserved by the supplier or for which another buyer has benefited from exclusivity. These restrictions are only allowed if there is an exclusive agreement and the supplier cannot limit the "passive sale". That agreement should require expert adaptations as regards the use of selective distribution agreements or exclusive distribution agreements for motor vehicles subject to specific legal rules. Premium distribution agreements (but not model agreements) contain a fairly detailed trademark license. The purpose of the license is to formalize the basis on which the distributor can use the supplier`s trademarks and to protect these trademarks and the rights of the supplier. Otherwise, click here to learn more about agency contracts. What are the performance obligations contained in the agreement? Whether a distribution agreement effectively restricts competition and whether, in this case, the benefits outweigh the anti-competitive effects often depends on the structure of the market. In principle, this requires an individual assessment on a case-by-case basis. However, the Community competition rules provide for an exemption for most distribution agreements for vertical agreements (often referred to as the "vertical block exemption") which gives a general presumption of the legality of vertical agreements, provided that the supplier`s market share is less than 30% and that the agreements do not contain specific essential restrictions.
The clause prohibits the supplier from instructing other third-party traders in the exclusivity zone to deliver products to that area himself and to deliver products to a third party for resale, if the latter is not prevented from actively delivering the products in that area. Although distribution agreements are generally vertical (i.e. between companies at different levels of the supply chain), they can affect competition between brands and between suppliers. Sometimes a distributor can make considerable investments in building and developing a market for a given product. To justify this investment, the distributor may seek protection against competition from other distributors, or even the supplier himself. These exclusive distribution agreements can benefit from EU and UK competition rules and are likely prohibited if they provide absolute protection within a territory (e.g. Β part of the United Kingdom or of a given country). . .