On 16 March 2020, the French Competition Authority (“FCA”) announced that it had fined Apple 1.1 billion euros, the highest ever imposed on a company for entering into vertical agreements with some of its distributors and for economic dependence on its independents (…) In the case of an exclusive wholesale agreement, the company cannot name another distributor in the same geographic area and grants exclusive rights to the distributor with whom the agreement is concluded. The distribution contract defines the terms of the agreement, including the cost of the goods or the commission rate, the duration of the contract during which the distributor can operate and other important details. Of course, the distributor benefits from exclusivity agreements, but there is a compromise on exclusivity, which means that suppliers generally define a kind of minimum performance obligation that the distributor must accept. Failure to comply with these obligations results in fines, a reduced commission rate or a loss of exclusivity rights. For many exclusive agreements, suppliers or wholesalers may require the distributor to maintain a level of performance. Their performance may be based on revenue targets or minimum orders. Such clauses help to ensure the justification for exclusivity agreements. A minimum or minimum performance clause also codifies the possibility of appointing additional distributors for a given territory when a distributor does not act in accordance with the standard. Minimum standards should ideally be established before both parties enter into the distribution agreement.
Setting standards in advance ensures that both parties are aware of the obligations and requirements they must meet. The Competition Authority rejects Molotov`s complaint about the practices of TF1 and M6 for lack of evidence, Molotov is a television channel distribution platform that aggregates and broadcasts French audiovisual programmes on the Internet. The app (…) It is also important to ensure that these contracts are customized for each deal. This applies not only because each deal will be subject to different conditions, but also because the purpose of distribution agreements can vary considerably. Some suppliers are looking for distributors to bring their products to their desired markets, while others are more focused on the distributor`s marketing know-how. The details of these transactions will vary considerably depending on the intent of these agreements and the terms specifically negotiated. Below, you will find a checklist of factors to consider when developing a distribution contract: the Competition Council launches the Guide to Vertical Agreements for Public Debates – The Competition Council has developed the “Guide to Vertical Agreements” to help companies that, on a case-by-case basis, must assess the compatibility of vertical agreements that they (…) While trade negotiations for the introduction of the 2021 agreements are already underway, the CEPC has published on its website a recommendation to “face the potential difficulties faced by the professionals concerned in the application of the current contracts due to the health crisis and its (…) The duration of the distribution agreement is often referred to as the “duration” of the contract. Distribution agreements can: If you choose a standard wholesale and sales model, you will find the following information: The agreement guarantees that the company will not appoint another distributor in the same region for the sale of the same product. With the exception of a developer distribution agreement, which is a separate type of agreement, a basic distribution agreement should include a specific language to make it legally binding. This information includes: distribution agreements exist in many forms and have many pieces of work, so it is important that they are established correctly from the outset in order to avoid disagreements between the parties on the street.