Distribution Agreements2

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Distribution Agreements & Competition Law 
1. WARM-UP 
Discuss: 
1. Can a distribution agreement be illegal? 
2. When does a commercial contract become a competition law issue? 
3. Should a supplier be allowed to control how a distributor sells products? 
4. What is more important: freedom of contract or market competition? 
2. VIDEO TASK (ADVANCED – COMPETITION LAW FOCUS) 
https://www.youtube.com/watch?v=QJAUTKb9uGQ 
 
While watching, answer: 
1. What is a vertical agreement? 
2. What is the difference between: 
o intra-brand competition 
o inter-brand competition 
3. What are vertical restraints? 
4. What are considered hardcore restrictions? 
5. Why does competition law regulate distribution agreements? 
 
3. KEY CONCEPTS 
Match the terms to their meanings: 
Term Meaning 
vertical agreement a. situation where agreement is presumed legal 
vertical restraint b. serious violation of competition law 
intra-brand 
competition c. competition between different brands 
https://www.youtube.com/watch?v=QJAUTKb9uGQ
Term Meaning 
inter-brand 
competition d. restriction imposed on distribution 
hardcore restriction e. agreement between companies at different levels of 
supply chain 
safe harbour f. competition between sellers of the same brand 
 
Critical Thinking 
 
• Why might restricting competition sometimes be allowed? 
• What is the risk of giving a distributor too much control? 
 
4. CONTRACT REVIEW 
You are a lawyer reviewing a distribution agreement. 
Read the clauses: 
 
Clause 1 – Exclusivity 
The Supplier appoints the Distributor as its exclusive distributor in the Territory. 
 
Clause 2 – Pricing 
The Distributor shall sell the Products at the price determined by the Supplier. 
 
Clause 3 – Territory Restriction 
The Distributor shall not sell the Products outside the Territory under any 
circumstances. 
 
Clause 4 – Non-Compete 
The Distributor shall not sell competing products during the term and for two 
years thereafter. 
 
5. COMPETITION LAW ANALYSIS 
For each clause: 
1. Does it restrict competition? 
2. Could it be illegal under competition law? 
3. Why? 
 
Focus Questions 
• Could price control be considered illegal? 
• Is territorial restriction always allowed? 
• When does exclusivity become problematic? 
 
6. SPOT THE LEGAL RISKS 
Identify which clauses could be considered: 
• a hardcore restriction 
• potentially valid under a safe harbour 
• legally risky but negotiable 
 
7. STRATEGIC ANALYSIS 
Discuss: 
1. Why would a supplier WANT to restrict competition? 
2. Why does the law LIMIT these restrictions? 
3. What happens if a contract violates competition law? 
 
8. CLIENT SCENARIO 
You represent the Distributor. 
Your client asks: 
“The supplier wants to control our resale prices and restrict our territory. Is this 
legal?” 
 
Your task: 
Give legal advice: 
→ ___________________________________________ 
→ ___________________________________________ 
→ ___________________________________________ 
 
9. FINAL TASK 
Write a short legal opinion: 
“This distribution agreement raises potential competition law concerns 
because…” 
→ ___________________________________________ 
→ ___________________________________________ 
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