Commercial contracts · Distribution
Commercial distribution agreement
A distribution agreement establishes how products reach the market from the supplier and who bears the commercial risks along the way. Exclusivity, territory, targets, recommended prices and online sales must be formulated in conjunction with competition rules, not solely operational logic.
Choosing the distribution model
In exclusive distribution, a territory or customer group is allocated to one or a limited number of distributors, subject to the conditions permitted by competition rules. Selective distribution uses criteria for admission to and operation of the network, while the non-exclusive model preserves the supplier’s freedom to work with multiple distributors.
The choice depends on the product, the investment required of the distributor, the parties’ market position, online channels and the justified level of control over network quality.
Commercial and operational clauses
The agreement must link sales targets to supply, marketing and proportionate consequences.
- Products, territory, customers and authorised channels.
- Exclusivity, conditions for maintaining it and exceptions reserved to the supplier.
- Orders, forecasts, minimum stock, delivery, acceptance and transfer of risk.
- Purchase price, discounts and the lawful communication of recommended prices.
- Presentation standards, servicing, warranties, returns and complaints.
- Use of the trade mark, marketing materials and reputation protection.
- Sales reporting, information exchange and protection of commercial data.
- Termination, pending orders, remaining stock and the sell-off period.
Limits imposed by competition law
Regulation (EU) 2022/720 provides, under certain conditions, a safe harbour for vertical agreements where the supplier’s and buyer’s market shares each do not exceed 30%. Even then, certain hardcore restrictions can take the agreement outside that safe harbour.
Fixing or imposing a minimum resale price differs from making a non-binding price recommendation or setting a maximum price. Territorial restrictions, passive sales and effective use of the internet must be analysed according to the distribution system and the Regulation’s exceptions.
Documents and information required
The analysis starts with the actual distribution map and the way prices and targets are set.
- The list of products, markets and sales channels.
- Territories, customer categories and existing distributors.
- Pricing policy, discounts and commercial campaigns.
- Forecasts, production capacity and stock rules.
- Brand, marketing, servicing and warranty requirements.
- Estimated market shares and relationships with competing undertakings.
How we work together
- 01Initial discussion
We clarify the business model, each party’s role, the intended outcome and non-negotiable points.
- 02Document review
We review the existing information and documents, then establish the appropriate structure for the distribution agreement and its schedules.
- 03Drafting and comments
You receive an editable draft, explanations of important clauses and a structured review round.
- 04Final version
We incorporate the negotiated terms, check schedules and prepare the document for signing and practical use.
Frequently asked questions
Can the supplier impose the resale price?+
Direct or indirect fixing of a minimum or fixed resale price raises serious competition concerns. Maximum prices and non-binding recommendations are analysed differently, provided they do not become imposed prices in practice through pressure or incentives.
Does territorial exclusivity prohibit all sales outside the territory?+
Not automatically. The rules distinguish between active and passive sales and provide specific exceptions. The clause must be adapted to the distribution system and the actual way customers place orders, including online.
What happens to stock when the agreement ends?+
The agreement should address any buyback, limited sell-off, returns, destruction of branded materials and the treatment of warranties or orders already accepted.
Need a distribution agreement reviewed from both a commercial and competition-law perspective?
Send your documents for a legal assessment and a solution tailored to your commercial objective.
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