Delchev & Partners

National specifics of vertical agreements in Bulgaria

 Agency v distribution agreements in civil law. In Bulgarian civil case law there is a strict differentiation between commercial agency agreements and distribution agreements. While commercial agency is expressly provided for in the law (ie there are statutory rules on this type of agreement), distribution agreements are only based on the general freedom to contract. Bulgarian case law is unambiguous that civil law rules on commercial agency (eg indemnity upon termination, etc) may not apply by analogy to distribution agreements as may be the case in some other member states.

 Broader national scope of commercial agency. Bulgarian law on commercial agency is broader than the scope of the Commercial Agency Directive. Under Bulgarian law commercial agency may be both for goods and services and commercial agents may act either in the name and on behalf (direct agency under a power of attorney) of the principal or in the agent’s own name but on the principal’s behalf (indirect agency without a power of attorney). Direct agency implies the legal consequences arise directly for the principal. Indirect agency means that the legal consequence arise for the agent and require a separate transaction to be passed onto the principal.

 (In)direct v (un)disclosed commercial agency. Direct and indirect agency under Bulgarian law is analogous but not entirely identical to disclosed and undisclosed agency.

 Risks for the agent. By law indirect agents in Bulgaria bear certain risks which for competition purposes may qualify as commercial and financial risks. For instance, indirect agents may (temporarily) become owners of the goods they purchase on behalf of the principal and this is also reflected for their tax and accountancy purposes. Also, there may be certain complications related to the obligations an indirect agent may acquire by law in its own name vis-à-vis third parties even where the third party is informed that the agent acts on the principal’s behalf.

 National law v the Commercial Agency Directive. National rules on commercial agency seem to have certain omissions and unclarities in relation to the Commercial Agency Directive and the case law is not very well developed.

 Vertical block exemption. The vertical block exemption in Bulgaria is provided for in a decision of the national competition authority (NCA) which is a by-law normative act (adopted by an executive authority and is of lower rank to the laws enacted by a legislative authority, eg the parliament).