This practice note often refers to two legal instruments adopted by the European Commission to help parties and their advisers determine the compatibility of their agreements with Article 101 of the TFUE, namely the category exemption of vertical restrictions (VRBE) and the guidelines on vertical restrictions. These instruments also provide information on the approach taken by the UK competition authorities with regard to the application of UK competition law to an agreement that could affect trade between Member States. Restrictions on the territory on which the distributor is authorized to sell or to customers to whom the distributor is authorized to sell must be free to choose where and to whom they sell, but “active selling” restrictions are permitted (but only if there is (i) an exclusive agreement, i.e. the territories are reserved exclusively for the supplier or another distributor); and (ii) the supplier is not allowed to limit passive sales). Distribution agreements are fairly flexible documents and the following clauses are not exhaustive. However, when entering into distribution agreements, parties often have to take competition rules into account, as they often wish to include such provisions and safeguards in agreements. This can be problematic from a competitive point of view and some issues can be a real violation of the relevant legislation. We have looked at this in more detail below. Exclusive distribution agreements may, in certain circumstances, be subject to EU and UK competition rules. John Schmidt and Zeno Frediani are addressing some of the key issues that food and beverage operators should keep in mind to prevent them from violating competition rules. A distribution contract is a commercial contract between a supplier of goods and a distributor of goods. The supplier may be a manufacturer or reseller of the products. In the modern business world, more and more companies are participating in distribution agreements that transcend international borders.
According to the World Bank, international trade accounted for nearly a third of U.S. gross domestic product (DPG) in 2017. Companies active in this type of cross-border activity need well-structured international distribution agreements. Key Clauses in an International Distribution Agreement An international distribution agreement is essentially a contract that establishes a framework for a business relationship between the global parties. In order to ensure efficient and efficient transactions, an international distribution agreement should be comprehensive. Among other things, some of the key clauses you will usually find in an international distribution contract include products and territory, the obligations of the parties, exclusivity clauses, prorogation/rescission and dispute resolution. Products and territory As a starting point, international distribution agreements will generally include information on specific products and the specific area covered by the contract. Parties` obligations Like other trade agreements, it is imperative that an international distribution contract clearly specify the responsibilities of each party.
Both the supplier and the distributor must have clarity on their obligations that must be met under the terms of the transaction. Exclusive provisions Some international distribution agreements contain exclusivity clauses. While not all of these agreements are exclusive, this is an issue that should be addressed in the treaty negotiations. Renewal/rescission The contract should also determine the duration of the business relationship.