The manufacturer or seller must also determine whether the distribution contract is exclusive or not exclusive. In an exclusivity agreement, the specified distributor is the only distributor with the right to sell the product in a geographic region or in several regions. If the agreement is not exclusive, the manufacturer or seller can supply other distributors who sometimes compete in the same market. The types of distribution agreements are as follows: a distribution agreement, also known as a distribution agreement, is a contract between the channel`s partners that defines the responsibilities of both parties. The agreement is usually between a manufacturer or seller and a distributor, but may, in some cases, involve two distributors or a distributor and another pipeline unit. Practical question: ABC Corp. produces and markets products in the United States. The products ABC produces require a lot of a certain type of precious metal. It is difficult to find suppliers for this material.
ABC has agreements with companies across the United States. ABC has exclusive purchase and sale agreements with companies in different parts of the United States. What will a court assess to determine if these agreements are legal? What arguments could ABC make to defend these agreements? All distribution agreements are potentially contrary to EU competition law and UK competition law. Designated distributors should carefully consider the type of agreements they wish to enter into and possibly ensure that they are covered by an appropriate de minimis exemption or other specific exemption. Essential elements of a distribution agreement include the duration (period during which the contract is in effect), delivery conditions and distribution areas covered by the agreement (regions located in the United States and/or international markets). In addition, the manufacturer or lender must define a distribution strategy if it takes into account the nature of the agreements to be concluded. A selective strategy requires a small group of distribution points to cover the channel`s target markets. An intensive strategy aims to place the product through a wide distribution in front of as many potential buyers as possible. This last point generally applies to consumer products rather than commercial markets. Example: ABC Corp. enters into agreements with 123 Corp, 456 Corp and 789 Corp to distribute its product in certain geographic areas. If ABC Corp is the sole producer of a consumer product, these agreements may thwart competition from distributors.
As such, it could have a negative impact on the price paid by customers. If ABC Corp. is unable to obtain a pro-competitive justification, this may be considered illegal. Distributors, such as retailers or value-added resellers (VARs), purchase products from merchants who then sell them to their end customers. In the merchant-distributor relationship, the distributor acts as an intermediary between a supplier and a distributor.