Regulation of the distribution relationship
Do restrictions on the distribution of competing products in distribution agreements apply, either during the term of the relationship or after?
Restrictions are generally enforceable subject to compliance with applicable competition law which, according to the main rule, provides that a prohibition of competition relating to competing goods or services must not, during the term of the contract, last for more than five years or one year after termination, except where permitted, by way of derogation, in accordance with the applicable competition rules (Commission Regulation (EU) No 330/2010, Article 5, paragraphs 2 and 3, on the application of Article 101(3) of the Treaty on the Functioning of the European Union to the categories of vertical agreements and concerted practices). However, notwithstanding the foregoing, members of a selective distribution system shall not be subject, directly or indirectly, to any obligation preventing them from selling brands of competing suppliers.
Can a supplier control the prices at which its distribution partner resells its products? If not, how are these restrictions enforced?
No, the supplier is not even allowed to set maximum prices which cannot be exceeded by the distributor because this practice infringes the freedom of the distributor to set his own prices. However, by means of price recommendations, the supplier may influence resale prices, provided that such recommendations do not constitute resale price fixing or price fixing, which is strictly prohibited by national law and the Union law, whether directly or indirectly, for example by determining the distributor’s mark-up or the maximum reductions to be granted to customers.
Resale price maintenance in vertical agreements is a hardcore restriction considered by antitrust authorities to be illegal and not exemptable. Since, in most cases, the commercial agent is integrated into the principal’s sales network and is also a real agent, the agent remains outside the scope of the competition rules in price maintenance.
Can a supplier influence resale prices in other ways, such as suggesting resale prices, establishing a minimum advertised price policy, announcing that it will not deal with customers who do not meet its price policy, or otherwise?
Resale price recommendations and suggestions are permitted, but the establishment of a minimum advertised price policy may, depending on its content, be characterized as anti-competitive. However, this would not prevent the advertising of recommended prices. However, any defensive boycott aimed at sanctioning violations of agreements restricting competition is a prohibited form of discrimination. The same goes for any predatory boycott.
Can a distribution contract specify that the supplier’s price to the distributor will not be higher than its lowest price to other customers?
There is no restriction on the inclusion of a most-favoured-customer clause in the contract.
Are there any restrictions on a seller’s ability to charge different prices to different customers, based on location, type of customer, quantities purchased, or otherwise?
There should be no impediment to applying different prices to different types of customers and in different locations or granting different discount rates to individual customers, etc., provided that the criteria are not arbitrary or discriminatory and are applied consistently.
Geographic restrictions and customers
Can a supplier restrict the geographies or categories of customers to which its distribution partner resells? Are exclusive territories allowed? Is there a distinction between active sales efforts and passive sales that are not actively solicited, and how are these terms defined?
The supplier may prevent the distributor from actively selling to certain geographical areas or categories of customers if these are exclusively reserved for the distributor, agent or principal. Supplier cannot prevent Distributor from selling passively (i.e. sales that are not actively solicited). In the case of a selective distribution system, the rule expressly authorizing the restriction of sales by the members of the system to unauthorized distributors in the territory reserved by the supplier to operate this system is applicable (Regulation (EU) No 330/2010 of the Commission, Article 4b, section iii on the application of Article 101(3) of the Treaty on the Functioning of the European Union to categories of vertical agreements and concerted practices).
Exclusive territories are allowed (in principle) and are customary.
Can a supplier restrict or prohibit online sales by its channel partners?
Generally, no. However, the supplier may require that online sales meet certain qualitative criteria. Supplier may not restrict or prohibit passive resale outside of Channel Partner’s assigned territory. However, restriction of active sales outside of a Distributor’s assigned territory is permitted.
Refusal to deal
Under what circumstances can a supplier refuse to deal with certain customers? Can a supplier restrict its distributor’s ability to deal with particular customers?
Unless it constitutes an abuse of a dominant position or is considered an unfair commercial practice, the refusal to deal with certain customers is, in general, a matter of freedom of contract.
However, in addition to preventing the distributor from making active sales in certain geographic areas or to certain categories of customers, under a selective distribution system, the supplier may restrict the ability of its distributor to deal with unlicensed distributors outside the territory of the scheme (i.e. non-members of the scheme). In addition, if you are in the agricultural and food chain, there are specific or equivalent provisions for the refusal to sell contained in article 2e of the law on the marketing of agricultural products and foodstuffs (1121/2018) to which you better pay attention.
Under what circumstances can a distribution or agency agreement be considered a reportable transaction under merger control rules and require clearance from the competition authority? What standards would be used to assess such a transaction?
Under merger control rules, a distribution agreement can, at least in principle, be considered a reportable transaction if the supplier exploits its market power in business relationships with distributors to make excessive profits or gain advantages. ‘other advantages. The contract may also require clearance if it is the supplier’s responsibility to exercise predatory or predatory abuses, such as imposing unfair selling prices or conditions that fall outside the scope of the restrictions. verticals generally applied to distribution contracts. These practices eventually lead to concentrations and deteriorate the conditions of competition, which can be fatal on a small market like the Finnish market. Under merger control rules, a distribution agreement is a reportable transaction requiring clearance from the competition authorities when the combined turnover of the parties exceeds €350 million and Finnish turnover of at least two of the parties exceeds 20 million euros each.
The standard used to assess the transaction, as regards the calculation of the turnover, is the Government Decree on the calculation of the turnover of the merging parties (1011/2011) and the standards and practices described in the guidelines on the control of concentrations issued by the French Competition and Consumer Authority (FCCA). If the concentration falls within the scope of Council Regulation (EC) No 139/2004 on the control of concentrations between undertakings, the acquisition is notified to the European Commission, which alone is empowered to examine concentrations of a community.
Unless it is a false or inauthentic agency contract, the agent as an auxiliary of his principal remains outside the scope of the antitrust rules.
Do antitrust or competition laws in your jurisdiction limit the relationship between vendors and their channel partners in any other way? How are these laws enforced and by which agencies? Can private parties sue under antitrust or competition laws? What remedies are available?
Although single branding is frequently implemented through a non-competition clause, it can also occur otherwise and be objectionable without a five-year or one-year grace period. This is the case if competitors are excluded from the market. Tied selling agreements may affect the market for those who manufacture the affected products as well as the price of the products. In addition to the prohibitions of anti-competitive agreements, there is the prohibition of the abuse of a dominant position which limits relations between suppliers and their distribution partners.
Suppliers and their distribution partners must comply with Article 5 of the Competition Act (948/2011) and Articles 101 and 102 TFEU. The competent body to enforce these laws is the FCCA.
Private parties may bring actions under antitrust or competition laws. Liability for damages under Section 20 of the Competition Act is due to any person who has suffered damage or injury as a result of the breach of Sections 5 or 7 of the Competition Act, or Articles 101 or 102 TFEU.
Available remedies include damages for economic loss, direct or consequential, such as, but not limited to, expenses, difference in price and loss of profits. Any loss due to price discrimination, excessive pricing due to a cartel or refusal of a party in a dominant position to supply is considered a direct loss to be compensated.
Date declared by law
Correct as of
Indicate the date the above information is accurate.
December 3, 2021.