Is it possible to block in the distribution agreement the possibility to sell certain products on a selected marketplace (e.g. Allegro, Amazon) and allow them to be sold, for example, only through the distributor’s official online shop?
Many things can be written into a contract, paper is patient.
However, for the contractual provisions to have legal effect, i.e. to be enforceable, they must comply with the provisions of the applicable law.
It is therefore not possible to write anything into the contract because this is how we see it and how it suits us.
Well, I mean, you can, but it will be pointless because you can’t use it effectively.
Instead, it is better to make a reasonable but working provision in the contract than a pointless but spectacular-looking one.
There is nothing easier, but to write in the contract that a contractual penalty has to be paid to us for selling our products on the designated marketplace, right?
Can this be done either way and will it always work?
No, it won’t.
Securing the possibility to sell certain products only in selected marketplaces, for example only through the brand’s official online shop IS POSSIBLE, but needs to be analysed from the point of view of regulations protecting fair competition.
A fairly good justification for imposing restrictions at the level of freedom to sell certain products in every possible location is their luxury or premium characteristics.
In the Coty Germany GMBH v Amazon (C-567/18) judgment of 2 April 2020, the CJEU concluded that Coty’s carefully constructed selective distribution system, based on qualitative criteria, is designed to protect the luxury nature of the brand and therefore Coty is entitled to restrict distributors from selling its cosmetics through online platforms such as Amazon or eBay. Thus, restricting the sale of luxury products through third-party online platforms was considered to be in line with EU competition rules.
The introduction of such restrictions in distribution agreements must be well-founded and thus requires prior consideration.
If you are a manufacturer or distributor and are affected by the issue of the so called selective distribution, we have been operating and advising businesses in this area for years. If you need support, contact us.
Is it possible to impose any restriction in the distribution agreement as to where certain products will be sold?
◼ Can you block the possibility to sell certain products in a specific marketplace?
◼ Introduce a contractual penalty?
◼ Will this work?
Building a reasonable selective distribution network is not simple and requires prior consideration of applicable competition law.
🔥 We have been advising in this area for years, both for manufacturers and distributors. We know which solutions are worth considering in the distribution agreements. Simple as that.
👉 If you need help in this area, contact us.
Joanna Lubecka
attorney
Is it possible to block in the distribution agreement the possibility to sell certain products on a selected marketplace (e.g. Allegro, Amazon) and allow them to be sold, for example, only through the distributor's official online shop?
Price collusion means that prices should be set at a certain level. You get price lists and you abide by them, you cannot give lower discounts than those agreed in advance.
However, when there is a dispute in the court, the basic practical difficulty leads to answering the question - where will such a dispute take place. In the contractor country or abroad? Can it be secured somehow?
One of the most important points that needs to be clarified in a B2B contract concluded with a foreign contractor are the terms of payment of the agreed remuneration. Payment after delivery of the subject of the contract or prepayment? And if so, what should be its amount? Which solution to choose? Read below.
Regardless of the form in which the agreement with a foreign partner is concluded, it is important that the parties agree on the most crucial elements of the contract. Incorporating these clauses will enable the parties to execute the contract in a transparent manner, without any ambiguity or uncertainties.
When force majeure events occur in international trade contracts, significant problems may arise in the process of its performance. However, including appropriate clauses in the contract that address such issues can help to manage the situation in a controlled and orderly manner.
As it is for the pandemic the world is slowly returning to normality, and there is much less talking about coronavirus cases, many entrepreneurs still feel the severe effects caused by the pandemic, including: disruptions in supply chains, lack of availability of materials or lack of components.
Case study. Check what Adam forgot when negotiating a contract with a foreign contractor
Although the indicated issues should be clearly regulated in each contract on the basis of which the guarantee is granted, in the case of foreign deliveries they are particularly important.
Below you will find some useful information on how to negotiate contracts concluded with a foreign business partner.