A system whereby only appointed distributors and retailers are permitted to purchase and resell the producer's goods.
Selective distribution agreements can limit intra-brand competition but are ordinarily only problematic when the producer has substantial market power (thus there is also limited inter-brand competition). Selective distribution systems based on qualitative criteria are acceptable but quantitative criteria coupled with market power may result in a breach of Article 101(1) TFEU and/or the Competition Act 1998, s 2.
Vertical Agreements and UK Competition Law STOP PRESS—On 9 May 2022, the UK Government laid before Parliament The Competition Act 1998 (Vertical Agreements Block Exemption) Order 2022 (UK VABEO). The new UK VABEO replaces the Retained Vertical Agreements Block Exemption on 1 June 2022. This Practice Note will be updated shortly to reflect the new laws. Vertical agreements are those entered into between two or more firms operating at different levels of the market, for example, distribution, agency and franchising agreements. This Practice Note considers the UK regime relating to vertical agreements. The Vertical Restraints Block Exemption Regulation (VRBE, Regulation No 330/2010) defines a category of vertical agreements which the Competition and Markets Authority (CMA) will normally regard as satisfying the conditions set out in section 9 of the Competition Act 1998 and will not therefore fall foul of the Chapter I prohibition. This Practice Note considers the application of the Chapter I prohibition and possible exclusions from its applications, the relevance of VRBE, vertical agreements involving horizontal co-ordination, examples of enforcement of the Chapter I prohibition against vertical restrictions, including resale price maintenance, price parity arrangements and the application of Chapter II prohibition. Brexit The UK was part of the EU for almost 50 years. Although the implementation period ended on 31 December 2020, there still remains a significant overlap between the application of Chapter I and Article 101
Luxury & fashion—Italy—Q&A guide This Practice Note contains a jurisdiction-specific Q&A guide to luxury & fashion in Italy published as part of the Lexology Getting the Deal Through series by Law Business Research (published: April 2022). Authors: Hogan Lovells—Luigi Mansani; Maria Luigia Franceschelli; Marco Berliri; Paola La Gumina; Vittorio Moresco; Elena Pellicano; Serena Pietrosanti; Maria Cristina Conte; Massimiliano Masnada; Giulia Mariuz; Sabrina Borocci; Eugenia Gambarara; Christian Di Mauro; Antonio Di Pasquale; Guido Di Stefano; Marina Maccagno; Elisabetta Nunziante 1. What is the current state of the luxury fashion market in your jurisdiction? The fashion market is big business in Italy, as it is the homeland of designers who made the history of fashion, worldwide renowned brands, and a venue for hundreds of specialised enterprises, as well as for artisans whose hands are internationally valued. The market comprises big companies, international groups, and small and medium-sized enterprises. According to a recent report published by Confindustria Moda, the aggregate turnover of the fashion industry was worth about €75 billion in 2020, with a 23.5 per cent decrease over 2019, due to pandemic-related losses from covid-19. However, despite losses in exports, imports and the number of employees in the sector, there was an encouraging increase in the propensity to export from 69.4 per cent in 2019 to 72.8 per cent in 2020. 2. What legal framework governs the development, manufacture and supply chain for fashion
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Competition law compliance—sales and marketing—guide for staff Contact with competitors, negotiations with customers or gathering market intelligence can pose a high risk of competition law compliance issues arising and it is easy to cross the line between legitimate and illegitimate contact. As the mere receipt of information may give rise to anti-competitive practice, it is never safe to discuss confidential strategic information with competitors or customers. This guide provides key information for sales and marketing staff to help you recognise competition law compliance issues and respond appropriately to these issues. 1 Contact with competitors do’s and don’ts This section contains some simple do’s and don’ts when in contact with competitors. Do Don’t Leave any meetings where others engage in improper discussions, and ensure your departure is on the record.Seek advice from [insert, eg the legal team] before discussing with a competitor or entering:—joint venture agreements;—cooperation agreements, eg R&D, sales, promotions, marketing, etc;—shareholder and alliance agreements;—agenda, minutes and contacts with trade associations;—any contact between competitors relating to commercial strategy where this is not publicly available.Report any competition law compliance concerns to [insert, eg the legal team].[See also [Competition law compliance—preparing for a meeting with competitors checklist for staff and Competition law compliance—meeting with competitors—FAQs]. Take joint action with competitors in respect of prices or other terms and conditions of supply.Agree with competitors to allocate product markets, territories
Standard clauses—general Definitions 1 Active Sales means actively approaching individual customers or marketing/advertising directly to specific customer groups, or customers in a particular territory in order to make sales; Contract Products means goods and/or services produced with the Licensed Technology; Exclusive Customer Groups is defined in Schedule [insert], with the relevant exclusive customers identified therein; Exclusive Term is defined in Schedule [insert]; Exclusive Territory is defined in Schedule [insert], with the relevant territories identified therein; Fees means all fees payable under this Agreement, as set out in Schedule [insert], including without limitation the [Implementation Fee], [the Licence Fee], [the Patent Fee] [and the Royalties]; Improvements means any improvements on, modifications of or enhancements to the Licensed Technology created or developed after [insert applicable date]; Intellectual Property Rights means any patents, trade marks, domain names, service marks, registered designs, right in confidential information, know-how, copyrights, database rights, design rights, trade and business names and registrations and/or applications for any of the foregoing and any other similar protected rights in any country; Know-how means all know-how, data and other information developed by the Licensor prior to [insert applicable date]
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Can a non-exclusive distributor appointed to a territory be prevented from selling outside that territory? In this Q&A we are referring to restrictions on sales into territories within EEA. Agreements between companies operating at different levels in the supply chain are often called ‘vertical agreements’. Vertical agreements may also be described as distribution agreements, although this does not reflect their full range and diversity. However, certain types of distribution arrangement may be prohibited under competition law, some examples of which include: • exclusive distribution—where the supplier agrees to sell to only one distributor for resale in a particular territory (see Practice Note: Competition law and exclusive distribution agreements) • selective distribution—where the supplier agrees to supply only specified approved distributors, who in return agree to sell on only to other approved distributors and end users (see Practice Note: EU competition law and selective distribution) • exclusive customer allocation—where the supplier agrees to sell to each distributor for resale only to an exclusive class of customers Article 101 TFEU and the vertical restraints block exemption Article 101 of the Treaty on the Functioning of the European Union (TFEU) prohibits agreements which have as their object or effect the prevention, restriction or distortion of competition within the internal market. It does not apply to agreements within the same corporate group so that agreements between a company and its subsidiaries who may act as distributors
Which Precedent agreement options should a company consider when supplying a product to end-customers via a representative third party? In answering this Q&A, we have focussed on the commercial models of agency, distribution and franchising as suggested ‘go to market’ options, and also licensing arrangements. Other models or agreements, or a combination of models and agreements, may be suitable for the circumstances in question. Agency Agency is an arrangement under which a principal appoints an agent to act at its direction for specified purposes. In business, agents are commonly appointed for the purposes of introducing and concluding agreements with new customers, marketing or customer support. The agent is given authority by its principal for specified purposes. The agent contracts on the principal's behalf rather than on its own. For an introduction to agency relationships, see: Agency—overview. For more detailed information on the different types of agency that may be suitable for your situation, see Practice Note: Nature and types of agency. We have a number of agency Precedents which could be adapted for your purposes which can be found in: Agency—overview Precedents tab. These include: • Sales and marketing agency agreement for goods—non-exclusive—pro-principal (the agreement does not provide for any exclusivity for the agent); also see the accompanying Drafting Notes which explain what the Precedent can be used for and the effect of each clause • Sales and marketing agency agreement for
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This week's edition of Competition weekly highlights includes, from an EU perspective, (1) the Commission’s decision to fine Crown and Silgan €31.5m in a cartel settlement, (2) the Commission’s decision to accept commitments from T-Mobile CZ, CETIN and O2 CZ to address concerns about mobile network sharing in the Czech Republic and (3) the Commission’s decision to issue a statement of objections to Alcogroup and Agroetanol over alleged an ethanol benchmarks cartel. In addition, the EU courts also issued a number of judgments, including (amongst others): (1) General Court’s judgment dismissing Illumina’s action challenging the Commission’s acceptance of an Article 22 EUMR referral in relation to the Illumina/GRAIL acquisition,(2) the General Court’s judgment upholding the Commission’s decision to reject complaint from Italian lighting associations alleging Phillips breached Articles 101 and 102 and (3) AG Rantos’ opinion suggesting that the General Court’s judgment should be upheld regarding the Commission’s decision finding an infringement of Article 102 TFEU in the Baltic rail market. Finally, from a UK perspective, this weekly highlights includes: (1) publication by the CMA of its final version of the guidance to accompany the Vertical Agreements Block Exemption, (2) the CMA’s review finding cause for concern in some parts of the road fuel market and its decision to launch a full market study, (3) the CMA’s decision to launch a consultation on draft guidance for the operation of the Subsidy Advice Unit, (4), and (5) the CMA’s decision to launch an investigation into suspected infringements of the Chapter I prohibition by companies involved in the production and broadcasting of sports content.
A round-up of UK competition law developments including (amongst other things) the publication by the CMA of its final version of the guidance to accompany the Vertical Agreements Block Exemption Order.
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58 Article 101: vertical block exemption regulation: the hardcore restrictionsArticles 4 and 5 of the vertical block exemption1 set out a number of restrictions which the European Commission regards as being very unlikely to be capable of exemption under Article 101(3) of the Treaty on the Functioning of the European Union. If the agreement contains any of the ‘hardcore’ restrictions listed in Article 4 (‘blacklisted clauses’) then the block exemption will not apply regardless of the market shares of the parties. The hardcore restrictions are serious restrictions of competition that are unlikely ever to be justifiable and would typically
Selective distribution is referenced 1 in Encyclopaedia of Forms and Precedents
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