Selective Distribution Agreement Example

For the purposes of Community competition law, a selective distribution agreement is a `vertical agreement`. A “vertical agreement” is an agreement that can be sold or resold by two or more parties operating at different levels of the production or distribution chain, with respect to the conditions under which the parties buy, sell or resell certain goods or services. The Vertical Agreement Block Exemption (VABE) establishes a general presumption of legality for `vertical agreements`, provided that the supplier`s market share is less than 30% and that the agreements do not contain specific essential restrictions. Hardcore restrictions include: type of distribution agreement – exclusive / non-exclusive / selective? Selective distribution is therefore not suitable for all companies. If the characteristics of the product do not require selective distribution or if certain minimum criteria are not required, such a system would not be effective. Here too, EU competition law comes into play. . . .

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