Most distribution agreements should not create competition concerns, provided that the supplier`s market share is less than 30% and that the parties ensure that they do not comply with the essential restrictions (for more details, see below). There are different types of distribution agreements. Below are some of the most common examples: you can also click here to inquire about agency contracts. A vertical agreement is an agreement between companies operating at different levels of the economic supply chain and includes, for example, agency and franchise agreements, as well as distribution agreements. Where a distribution agreement contains a hardcore restriction, it will generally not benefit from one of the safe ports established by EU competition law, including the block exemption for vertical agreements. BAM`s construction services in the UK have signed a “Solus” supply agreement with Polypipe Group for the supply of drainage products for all its infrastructure and construction projects in the UK. This is a limited overview – please sign up or subscribe to know everything we know about the term “Solus Agreement”. 1 Anti-competitive agreements Anti-competitive agreements define agreements between undertakings which prevent, restrict or distort (or are intended to) competition and which affect trade in the UK and/or the EU. A distribution contract is an agreement between a supplier of goods and a trader of goods. The supplier may be a manufacturer or be a trader himself who resells the goods of another. Distribution agreements may conflict with UK and EU competition law, so caution must be exercised when drawing them up.
This briefing note summarizes some of the main considerations to consider when preparing a distribution 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 defendants convinced the buyers to enter into a solus agreement with ESSO.” Railway company BAM Nuttall and BAM Construct UK have signed the agreement with Polypipe Civils & Vert Urbanisation and Polypipe Building Products in a step that indicates a closer relationship in purchases between the two BAM UK companies, which is expected to be the first in a series of such agreements. Bam is convinced that carefully oriented activities will offer a competitive advantage to their customers and bring benefits in terms of both quality and performance. Solus agreements, such as those signed with Polypipe, are expected to generate economies of scale and a number of benefits that reduce the cost of capital for customers and provide sustainable added value. Companies involved in anti-competitive behaviour may consider their agreements unenforceable and risk being fined up to 10% of their global turnover for particularly harmful behaviour and exposing themselves to possible actions for damages from customers. In addition, persons dealing with the company could face disqualification orders for directors, or even criminal penalties for serious infringements of competition law. .