Delchev & Partners

“VERTICAL” IN THE SPOTLIGHT: HARDCORE RESTRICTIONS – RESALE PRICE MAINTENANCE GETTING READY FOR 1 JUNE 2022 AND EUROPEAN COMPETITION RULES CHANGE   WHAT? Certain types of vertical restraints are particularly likely to hinder competition and harm consumers. These hardcore restrictions will not benefit from the safe harbour provided in the VBER and will often amount to an infringement of Article 101 TFEU. Resale price maintenance (“RPM”) constitutes a prime example of such hardcore or black-listed restrictions. RPM refers to vertical price fixing: a situation where, as a result of a vertical agreement, the buyer’s ability to set its resale price is … Continue reading →

“VERTICAL” IN THE SPOTLIGHT: HARDCORE RESTRICTIONS GENERAL GETTING READY FOR 1 JUNE 2022 AND EUROPEAN COMPETITION RULES CHANGE   WHAT? Vertical agreements often contain a vast number of provisions, regulating different aspects of a vertical relationship. However, the EU competition rules determine that certain provisions cannot be included in distribution agreements since they impede competition to an extent that cannot be permitted. These are the so-called “hardcore restrictions”. Hardcore restrictions can be imposed both directly and indirectly, in which case the assessment is more complex, but the outcome is the same. Including a hardcore restriction in a vertical agreement has … Continue reading →

“VERTICAL” IN THE SPOTLIGHT: NON-COMPETE RESTRICTIONS (POST TERM) GETTING READY FOR 1 JUNE 2022 AND EUROPEAN COMPETITION RULES CHANGE   WHAT? Suppliers often provide commercial know-how to their distributors which they would not want to benefit their competitors. A critical situation in that respect is obviously the period immediately following the termination of a distribution agreement. The distributor is likely to switch to a competing supplier and there is a real risk that the distributor will share the know-how with his new supplier. In order to address this issue, distribution agreements may include a so-called post-term non-compete obligation. This obligation … Continue reading →

“VERTICAL” IN THE SPOTLIGHT: NON-COMPETE RESTRICTIONS GETTING READY FOR 1 JUNE 2022 AND EUROPEAN COMPETITION RULES CHANGE   WHAT? Distribution agreements often contain non-compete clauses. They impose restrictions on a distributor’s ability to manufacture or sell products competing with the products covered by the distribution agreement, the so-called contract products. Let us make things concrete. A distributor is appointed to sell vacuum cleaners of brand A (the contract products). The non-compete restriction determines whether the distributor is allowed (and, if so, to what extent) to manufacture or sell vacuum cleaners of competing brand B or any other competing brand for … Continue reading →

“VERTICAL” IN THE SPOTLIGHT: AGENCY (“DUAL ROLE” AGENTS) GETTING READY FOR 1 JUNE 2022 AND EUROPEAN COMPETITION RULES CHANGE   WHAT? Over the past few years, a trend has been noticeable toward a commercial strategy combining agency and distribution models. In particular, depending on the products or customers involved, a business partner is sometimes requested by the same supplier to act as both its independent distributor and its commercial agent. Such business partners are often referred to as “dual role” agents. Let us make things concrete. A supplier of cooking appliances relies on independent distributors for the distribution of the … Continue reading →

“VERTICAL” IN THE SPOTLIGHT: AGENCY (DEFINITION AND TEMPORARY TRANSFER OF OWNERSHIP)  GETTING READY FOR 1 JUNE 2022 AND EUROPEAN COMPETITION RULES CHANGE   WHAT? In the previous DLC countdown, it was highlighted that EU competition law applies a particular definition of agency. Not every agent in the sense of commercial or business law will be treated as an agent for EU competition law purposes. The agency test under EU competition law is met if the agent assumes no or only insignificant risks associated with the agreements concluded or negotiated on behalf of the principal. If the agency test is met, … Continue reading →

AGENCY (LEGAL TEST)  GETTING READY FOR 1 JUNE 2022 AND EUROPEAN COMPETITION RULES CHANGE   WHAT? The particular nature of agency agreements triggers the application of a specific competition law regime. This regime is based on a split between (i) the role assumed by the agent acting as an intermediary of the principal (i.e. where he is trying to secure transactions for the principal) and (ii) the position of the agent as a provider of agency services to principals (i.e. where he seeks appointments as an agent). With regard to the second aspect, the agent acts as an undertaking that … Continue reading →

“VERTICAL” IN THE SPOTLIGHT: OVERVIEW OF DISTRIBUTION SYSTEMS  GETTING READY FOR 1 JUNE 2022   WHAT? Before diving into the individual restrictions of competition that typically appear in vertical agreements, it is useful to first focus on the main types of distribution systems. Such types include exclusive distribution, non-exclusive or free distribution, selective distribution, franchising and agency. Suppliers can opt for a single system that covers the entire EEA, but may also combine distribution systems. This is for instance the case where a supplier applies non-exclusive distribution in certain parts of the EEA and selective distribution in other parts. An … Continue reading →