Non-Competition Clauses In Distribution Agreements

The supplier must limit the ability of a distributor that is part of a selective distribution network to make active or passive sales to resellers that are not part of that network. A supplier may prohibit its distribution partners who are part of a selective distribution network, recognisably, third-party platforms for the online sale of the products in question, provided that: [7] Commission Communication 2001/C 368/07 on small-scale agreements that do not materially restrict competition under Article 81, paragraph 1, of the Treaty establishing the European Community (of) and that the non-competition clause is invalid. If it can be separated from the rest of the agreement, the rest of the agreement is valid. It is important to include delays in all non-competition prohibitions. As a general rule, the restrictions apply to the length of the business relationship (or employment) and to some time after. However, it is important to ensure that post-contract restrictions are appropriate or no longer enforced. For example, a permanent limitation would not apply, since competition law is supposed to promote competition between firms and innovation. According to the EU`s de minimis communication, the effects on competition are considered negligible if each of the parties to a vertical agreement has a market share of less than 15% (10% if the vertical agreement is concluded between competitors). [10] Such an agreement, unless it contains prohibited “strict” restrictions that will be discussed later in Section X, is automatically permitted unless the market is characterized by several parallel agreements. In the case of exclusive distribution, it is not possible to prevent the exclusive distributor from making passive sales (for example. B e-commerce sales) outside its territory. However, the supplier may limit the exclusive tracing wholesaler to refrain from selling to the end consumer and the consumer. This also applies to e-commerce (passive sales).

However, when a supplier assigns a particular group of customers exclusively to a retailer, passive sales by other distributors cannot be limited by the supplier. [14] Competition rules for technology transfer agreements, notification in accordance with Article 5 of Council Regulation 19/65/EEC of 2 March 1965 on the application of Article 81, paragraph 3, of the EC Treaty to certain categories of agreements and joint practices; Regulation (EC) 1/2003, JO L 347 of 31.12.2003, p. C 235, October 1, 2003, p. 10-54, amended by regulation (EC) and requested, on October 1, 2003, a new draft regulation on the application of competition rules applicable to technology transfer agreements. [14] This analysis provides an overview of EU competition rules that may affect agreements between the United States.