Competition law and agency
Produced in partnership with K&L Gates
Competition law and agency

The following Competition practice note produced in partnership with K&L Gates provides comprehensive and up to date legal information covering:

  • Competition law and agency
  • Distinguishing between an agent and distributor
  • Advantages of agency
  • When will there be genuine agency?
  • A step by step guide on identifying risk
  • Step 1—can any contract-specific risks be established?
  • Step 2—where no contract-specific risks are established, can any risks relating to market-specific investments be established?
  • Step 3—where no contract-specific risks and no market-specific investments can be established, can any risks related to other required activities within the same market be established?
  • When might a genuine agency breach Article 101(1) TFEU?
  • Recent trends and investigations
  • More...

There are several ways in which a supplier can distribute its product. A supplier may:

  1. distribute products or services itself

  2. use a distributor, or

  3. use an agent.

In making this decision, a supplier will inevitably be influenced by a variety of commercial considerations. Alongside such commercial considerations, a supplier will also have to consider EU and/or national competition law issues potentially impacting the proposed commercial arrangement. See further, Analysing vertical agreements under competition law.

There are particular competition law considerations to be taken into account depending on whether a supplier opts to use an agent or a distributor to get its products to the market.

In order to avoid infringing Article 101 TFEU (or equivalent national rules), it is important to consider carefully whether the agreement would be regarded as a 'genuine agency agreement' for the purposes of competition law, taking into account all the facts and circumstances.

Where an agreement is a genuine agency agreement, certain restrictions under Article 101(1) TFEU will not apply.

This is because, as articulated in the seminal case of DaimlerChrysler AG, a genuine agent working for the benefit of his principal 'may in principle be treated as an auxiliary organ forming an integral part of the latter’s undertaking, who must carry out his principal’s instructions and thus, like a commercial employee, forms an economic unit with his undertaking'.

In other words, the agreement is

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