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Category Certificate/Licence In Respect of Agreements between Suppliers and Resellers [1998] IECA 528 (4th December, 1998)
COMPETITION
AUTHORITY
CATEGORY
CERTIFICATE/LICENCE
In
Respect of Agreements between Suppliers and Resellers.
DECISION
No 528
Date:
December 4 1998
Price:
£1.40
£1.90
include postage
CATEGORY
CERTIFICATE/LICENCE
In
Respect of Agreements between Suppliers and Resellers.
Introduction
1.
Section
4(1) of the
Competition Act, 1991 states that “all agreements between
undertakings, decisions by associations of undertakings and concerted practices
which have as their object or effect the prevention, restriction or distortion
of competition in trade in any goods or services in the State or in any part of
the State are prohibited and void.”
Section 4(4), as amended by
Section
5 of the
Competition (Amendment) Act, 1996, provides that:
“4(a)
The Authority may certify that in its opinion, on the basis of the facts in its
possession:
(i)
an agreement, decision or concerted practice, or
(ii)
a category of agreements, decisions or concerted practices,
does
not contravene subsection (1).
(b)
Where a certificate under this subsection covers a category of agreements,
decisions
or concerted practices, any agreements, decisions or concerted
practices
(as the case may be) within that category need not be notified under
Section
7 to benefit from the certificate.”
2. Under
Section 4(2), the Authority may grant a licence in the case of any agreement or
category of agreements which,
“having
regard to all relevant market conditions, contributes to improving the
production of goods or provision of services or to promoting technical or
economic progress, while allowing consumers a fair share of the resulting
benefit and which does not:-
(i)
impose on the undertakings concerned terms which are not
indispensable
to the attainment of those objectives;
(ii)
afford undertakings the possibility of eliminating competition in
respect
of a substantial part of the products or services in question”.
3. Since
October 1991, a large number of agreements involving exclusive and
non-exclusive distribution, exclusive purchasing, franchising and selective
distribution have been notified to the Authority. The Authority has previously
dealt with many of these notified agreements through a combination of category
licences and individual certificates and licences. The Authority has reviewed
its existing category licences and individual certificates and licences for
non-price vertical restraints. The Authority has concluded that, in certain
circumstances, non-price vertical restraints are not anti-competitive and has
identified a category of such agreements which, in its opinion, do not
contravene
Section 4(1) of the
Competition Act, 1991. The Authority has
identified a second category of such agreements which may normally be regarded
as satisfying the conditions for the grant of a licence laid down in
Section
4(2).
The
Subject of the Decision
4. This
decision applies to vertical agreements between undertakings which operate at
different stages in the supply chain in respect of the same product or service,
whereby one party supplies the products concerned to the other for resale. It
therefore includes, for example, agreements between manufacturers, importers
and suppliers (referred to collectively hereafter as ‘suppliers’)
on the one hand and distributors, wholesalers and retailers on the other
(referred to collectively hereafter as ‘resellers’). The vertical
agreements concerned include exclusive and non-exclusive distribution,
exclusive purchasing, franchising and selective distribution. Such commercial
agreements apply to a wide range of goods and services.
5. Exclusive
distribution
incorporates an obligation, either explicit or implicit, on the supplier to
sell a good or service only to one particular distributor in a certain
territory.
Exclusive
purchasing
is an obligation on the buyer, or an incentive scheme agreed between the
supplier and the buyer, which makes the latter, by the express language of the
contract or its practical effect, purchase a particular good or service
exclusively from the supplier or third party designated by that supplier.
6. A
franchise
agreement
consists essentially of an agreement, whereby one party grants to the other the
right to exploit a package of intellectual property rights relating to trade
marks, trade names, shop signs, utility models, designs, copyrights, know-how
or patents, for the resale of goods or the provisions of services to end users.
“Know-how” means a package of non-patented practical information,
resulting from experience and testing by the franchisor, which is secret,
substantial and identified. The agreement usually includes restrictions in
relation to the assignment or use of intellectual property rights, and the
agreement usually involves also the exclusive distribution or exclusive
purchasing of goods and/or services. The term “franchise
agreement” includes master franchise agreements, whereby one undertaking,
the franchisor, grants the other, the master franchisee, in exchange for direct
or indirect financial consideration, the right to exploit a franchise for the
purposes of concluding franchise agreements with third parties, the franchisees.
7. In
selective
distribution agreements
,
a manufacturer usually agrees to supply only to dealers satisfying certain
professional or technical requirements, while the approved dealers undertake
not to purchase or sell the contract goods and/or services from wholesalers or
retailers outside the territory. As a general rule, the establishment of a
selective distribution agreement depends on the nature of the product; for
example, with qualitative selection agreements, the manufacturer may define the
professional or technical criteria required by the dealer; with quantitative
distribution agreements, the manufacturer limits the number of dealers purely
on quantitative grounds. Selective distribution agreements may involve a
combination of both qualitative and quantitative features.
8. Non-exclusive
distribution
consists of agreements between suppliers and resellers for the distribution of
goods and services which do not either implicitly or explicitly allocate
specific territories to the reseller, involve any restriction on the reseller
dealing in competing products, or any exclusive purchasing obligations.
Agreement
Between Undertakings
9.
Section
3(1) of the
Competition Act defines an undertaking as “a person being an
individual, a body corporate or an unincorporated body of persons engaged for
gain in the production, supply or distribution of goods or the provision of a
service.” The Supreme Court has ruled that the phrase for gain is to be
interpreted as “for a charge or payment.” Thus the definition of
undertaking is quite wide ranging and it is clear that firms come within this
definition. This decision relates to agreements between parties whereby one
party supplies goods or services to the other for resale, so that, in effect,
both parties to such agreements are engaged for gain either in the production,
supply or distribution of goods and/or the provision of services and are
therefore undertakings.
Applicability
of Section 4(1)
10. There
has been much economic analysis of non-price vertical restraints. The main
conclusions of such analysis are that such restraints may or may not have
anti-competitive effects, depending on the particular circumstances in which
they operate. From the point of view of competition policy, it is best to
distinguish cases in which vertical restraints have an overall positive effect
from those which are not welfare enhancing. The Authority notes that vertical
agreements facilitate the promotion of sales of a product and lead to intensive
marketing and to continuity of supplies while at the same time rationalising
distribution. For example, the use of own transport facilities allows larger
distributors to rationalise their deliveries, while reducing costs. Vertical
restraints in many cases facilitate inter-brand competition between the
products of different manufacturers. The appointment of an exclusive
distributor, for example, who will take over sales promotion, customer services
and carrying of stocks, is often the most effective way, and sometimes indeed
the only way, for the manufacturer to enter a market and compete with other
manufacturers who are already present.
11. The
Authority is also of the view that vertical agreements generally lead to an
improvement in distribution because the supplier is able to concentrate his
sales activities and he does not need to maintain numerous business relations
with a large number of dealers. In the case of domestic firms, it is often
preferable for the supplier to concentrate on production and to delegate the
distribution function to a specialist distributor who already possesses the
necessary organisation and dealer contacts. Particularly in the case of
international trade, difficulties resulting from linguistic, legal and other
differences are more easily overcome by the appointment of a distributor
located in the territory.
12. The
Authority considers that, on the basis of current economic thinking, vertical
restraints in general should not be considered to be
a
priori
anti-competitive. While negative effects can arise, these are unlikely to have
any significant economic effects in the absence of any significant degree of
market power at either supplier or distributor/retailer level. The Authority
is of the view that where neither the supplier nor the reseller have a market
share in excess of 20% of the relevant market, they are extremely unlikely to
have a sufficient degree of market power for any non-price vertical restraints
to have an adverse effect on competition. Nor in such circumstances does the
agreement create the possibility of foreclosing a significant share of the
market to competitors at either the upstream or the downstream level. In such
circumstances, non-price vertical restraints may generally be considered to
have neither the object nor the effect of preventing, restricting or distorting
competition and therefore do not, in the opinion of the Authority, contravene
Section 4(1). Where either party has more than 20% of the relevant market, it
may enjoy a degree of market power. Economic analysis suggests that, in those
circumstances, non-price vertical agreements may have anti-competitive effects
and may therefore contravene
Section 4(1).
Non
Exclusive Distribution
13. In
many instances, suppliers supply goods and/or services to resellers on foot of
non-exclusive distribution agreements. Such agreements do not either
implicitly or explicitly allocate specific territories to the reseller, involve
any restriction on the reseller dealing in competing products, or any exclusive
purchasing obligations. Such non-exclusive arrangements, whereby the supplier
simply supplies goods and/or services for resale to a reseller without any
restriction on the commercial freedom of either party, do not, in the
Authority’s opinion, prevent, restrict or distort competition and do not,
therefore, contravene
Section 4(1). For the avoidance of doubt, the Authority
believes that where
de
facto
the supplier enters an agreement with only a single reseller within the
territory, such an agreement constitutes an exclusive agreement.
Clauses
which Contravene Section 4(1)
14. In
the Authority’s opinion, the following restrictions are likely to have an
adverse effect on competition and therefore contravene
Section 4(1):
- Resale
price maintenance (RPM).
- Clauses
which provide absolute territorial protection.
- Post-term
non-compete clauses. An exception is made in the case of franchise agreements
for
durations not greater than one year.
(a)
Resale Price Maintenance
15. A
limitation on a distributor in a vertical agreement in determining his own
resale prices constitutes a restriction on competition. In particular, the
distributor might be required to sell at a price fixed by the supplier, or at a
price not less than nor more than that indicated by the supplier. The
Authority regards such limitations on the reseller's freedom to determine his
own prices, as representing the enforcement of, or being conducive to, resale
price maintenance. As RPM prevents price competition between resellers in
respect of the products in question, and given that it may also be used to
facilitate cartel arrangements at either the supplier or distributor level,
such arrangements, in the Authority’s opinion, contravene
Section 4(1).
16.
The
Authority has considered the validity of the argument that suppliers should be
allowed to impose maximum resale prices. Maximum prices may boost sales
volumes by lowering prices to consumers and protect brand reputation by
preventing price increases. The Authority is also of the view that maximum
prices would enable franchisors to encourage outlets to engage in price
promotions nation-wide. On the other hand, the Authority is also aware of the
view that maximum pricing may lead to collusion amongst manufacturers to raise
prices and may, effectively, amount to fixed-price RPM. The Authority believes
that, while prices may be specified as maximum prices, there may be a tacit
understanding, or it may be the customary practice, that such prices are the
prices charged by resellers so that, in effect, the arrangements have the
effect of fixing resale prices. Consequently, in the Authority’s
opinion, maximum RPM may be anti-competitive in certain circumstances and it is
unable to conclude that, in general, it does not contravene
Section 4(1).
17. Suppliers
may recommend prices and, provided retailers are free to set their resale
prices, the recommending of prices by suppliers does not, in the
Authority’s opinion, contravene
Section 4(1). However, the Authority
believes that any covert or tacit understanding that resellers must adhere to
the prices recommended by the supplier would amount to RPM, would be
anti-competitive and contravene
Section 4(1).
For
the
Category
Certificate
to apply, any price recommendation must:
(i)
inform the reseller that he is free to set his own prices;
(ii)
contain no reference to the margins resulting from applying any
recommended price;
(iii)
involve no requirement to display such a recommended price; and
(iv)
provide that no measures are taken to secure adherence to such price.
(b)
Absolute Territorial Protection
18. In
the Authority’s view, any provisions or combination of provisions which
prevent resellers outside a territory allocated to a particular reseller from
supplying customers in that territory in response to requests from such
customers, restrict competition. This may also take the form of requiring the
distributor not to supply anyone who might resell the products outside the
territory. Where the agreement is one of a number for different territories,
each with the same requirement, this provides each (exclusive) distributor with
absolute territorial protection. They are assured that they are the only
source of supply of the products in the territory, and that other resellers and
users are unable to obtain the products from any source whatsoever outside the
territory. This effectively eliminates any competition to a distributor in
respect of the contract products i.e. it eliminates any possibility of
intra-brand competition.
(c)
Post-term limitations
19. Any
restrictions which apply after the termination of the agreement also, in the
Authority’s opinion, generally contravene
Section 4(1). In the case of
franchise agreements, however, a limited post-term non-compete clause of one
year or less does not, in the Authority’s opinion, contravene
Section
4(1), as it is an ancillary restriction needed to protect the goodwill of the
franchisor. It is an essential feature of a franchise agreement that the
franchisor provides the franchisee with the necessary information, training,
intellectual property and other technical know-how to operate the business.
Clearly, it would not be in the franchisor’s interests to provide such
know-how if the franchisee could simply terminate the agreement and use the
information provided to compete with the business - this would effectively
prevent the operation of franchise type arrangements. A post-term restriction
on the franchisee is necessary to protect the goodwill of the franchisor. In
the Authority’s opinion, a post-term non-compete restriction limited to
12 months from the termination of a franchise agreement does not contravene
Section 4(1).
Special
Rules for Particular Sectors.
20. The
Authority has concluded, in the case of various forms of non-price vertical
restraint, that, as a general rule, where the relevant market share held by
both parties to the agreement is below 20%, the agreement is not
anti-competitive. However, in markets where such arrangements between
suppliers and resellers are the norm, so that a large part of the products in
question are supplied for resale on the basis of such agreements, certain types
of arrangements may restrict competition. In particular, where all, or the
majority of, potential resellers have entered into exclusive purchase
commitments, such arrangements could prevent new suppliers from entering the
market by blocking access to all or most of the possible resellers, resulting
in the foreclosure of the market. The Authority has identified motor fuels as
a particular area where this problem arises. In the case of motor fuels, the
vast majority of non-company owned outlets are supplied on foot of 10-year
exclusive purchase agreements with the major oil companies. The Authority
believes that such agreements have resulted in a degree of foreclosure in that
market, since they impede the entry of new suppliers to the market, and that
they therefore restrict competition and contravene
Section 4(1).
The
Authority has also identified the market for liquefied petroleum gas (LPG)
supplied for resale in cylinders as a market where similar foreclosure problems
arise. It believes that exclusive purchase agreements for such cylinder LPG
also result in a degree of market foreclosure and therefore contravene
Section
4(1).
Applicability
of Section 4(2).
21. The
Authority believes that, although a vertical agreement may have some
anti-competitive effect where either party has a market share in excess of 20%,
such arrangements nevertheless lead to improvements in efficiency in the
distribution of goods and services, by enabling suppliers to concentrate their
sales activities and removing the need for them to maintain numerous business
relations with a large number of retailers. They enable manufacturers to
concentrate on production, while delegating distribution functions to
specialist resellers who already possess the necessary organisation and dealer
contacts. Such arrangements also facilitate the promotion of sales,
development of intensive marketing and continuity of supplies and they result
in a rationalisation of distribution. They also provide an effective way-and
are sometimes the only way for a supplier to enter the market and compete with
existing suppliers.
22. As
a rule, non-price vertical restraints allow consumers a fair share of the
resulting benefit, as they gain directly from any improvements in distribution
and because they lead to a wider choice of products being available to consumers.
23. The
various non-price vertical restraints incorporated in exclusive distribution,
exclusive purchasing, franchising and selective distribution agreements are
normally indispensable to the attainment of these objectives. Economic
analysis shows that such measures provide strong incentives for resellers to
devote the necessary time and resources to promoting and selling the products
of the manufacturer in circumstances where it would otherwise be difficult to
monitor the activities of the reseller. Such arrangements are therefore
essential to maximise efficiencies in distribution.
24. Where
either party to the arrangement has a market share in excess of 40% of the
relevant market, however, such arrangements may afford it the possibility of
eliminating competition in respect of a substantial part of the goods or
services in question. The Authority therefore considers that, where either
party’s market share exceeds 40%, such arrangements do not necessarily
satisfy all four of the requirements for a licence and the
Category
Licence
does not apply in such circumstances. The Authority recognises, however, that
an individual agreement might satisfy this requirement, although the
party’s market share may exceed this level.
(a)
RPM Clauses
25. The
Authority considers that while, in some circumstances, RPM might produce some
improvements in efficiency, in many instances it will not do so. In such
circumstances, consumers will not benefit from such arrangements and are likely
to pay higher prices for products. RPM cannot therefore be considered to be
indispensable to the attainment of such objectives. Where RPM operates as part
of a horizontal price-fixing arrangement between either suppliers or resellers,
it would result in the elimination of price competition in respect of a
substantial part of the products in question. Consequently, it does not
satisfy the requirements for a licence.
(b)
Absolute Territorial Protection
26. In
the Authority’s view, any provisions or combination of provisions which
prevent resellers outside a territory allocated to a particular reseller from
supplying customers in that territory in response to requests from such
customers, do not lead to any improvements in efficiency or contribute to
technical or economic progress. Consumers do not therefore receive any benefit
from such arrangements. Such provisions are not therefore indispensable to
achieving these objectives.
(c)
Post-term Non-Compete Restrictions
27. Except
in the case of franchise agreements, post-term restrictions on competition
which continue after the termination of the agreement produce no benefits and
are not indispensable, and so they fail to fulfil the conditions of
Section
4(2), and do not benefit from this Category Licence. While this does not apply
to any provisions requiring either party not to use or disclose confidential
information regarding the business of the other, this is the case only if they
are not used to prevent competition. If they were to be used in this way, this
would produce no benefit and would not be indispensable and would not fulfil
the conditions of
Section 4(2). Such provisions cannot benefit from this
Category
Licence.
(d)
Special Cases
28. As
noted above, the Authority considers that exclusive purchasing agreements for
motor fuels restrict competition in that sector. However, the Authority
considers that such agreements contribute to improvements in the distribution
of motor fuels. In return for such restrictions on the reseller, suppliers
invest heavily in the development of filling stations, leading to improved
levels of services and safety. Consumers benefit both from the efficiencies
achieved in distribution and from the investment in garage forecourt
facilities. The Authority believes that an exclusive purchase obligation is
essential to achieve these objectives. However, it considers that this is only
true where that obligation applies only for a limited period of time, i.e. an
unlimited exclusive purchasing requirement is not indispensable for such
objectives. The Authority has decided, therefore, that the
Category
Licence
will only apply to such exclusive purchasing obligations which do not exceed
ten years in duration and do not include any first option on renewal on the
expiry of the agreement. Exclusive purchase agreements for cylinder LPG are
the subject of a separate licence and are excluded from the scope of this
Category Licence.
The
Decision
29. The
Competition Authority has issued the following decision in relation to vertical
agreements between suppliers and resellers of goods and services:
(i)
In the opinion of the Authority, on the basis of the facts in its possession,
vertical agreements between suppliers and distributors, of a kind described in
the attached Category Certificate for Non-Price Vertical Restraints, do not
contravene
Section 4(1) of the
Competition Act, 1991, as amended. In
accordance with
Section 4(4) of the
Competition Act, 1991, as amended, it
hereby issues a certificate in respect of the category of agreements defined in
Article 2 of the attached Certificate.
(ii)
The Authority hereby grants a licence, in accordance with
Section 4(2) of the
Competition Act, 1991, as amended, in respect of the category of agreements
defined in Article 2 of the attached Licence, on the basis that, in its
opinion, having regard to all relevant market conditions, the category of
agreements identified therein satisfy the requirements of the said
Section
4(2). This licence shall apply from January 1 1999 until December 31 2003.
Competition
Authority Certificate
In
Respect of Agreements Between Suppliers and Resellers
Article
1.
1. This
Certificate is issued by the Competition Authority, pursuant to Section 4(4) of
the Competition Act, 1991, as amended, in respect of agreements (as defined in
Article 2 below), to which only two undertakings are party and whereby one
party, the supplier, agrees with the other, the reseller, to supply certain
goods and/or services for resale within the State or any part of the State.
Article
2
.
2. Subject
to the provisions of Articles
5
to 7 this Certificate applies to the following categories of agreement:-
(a)
exclusive distribution, whereby the supplier agrees with the reseller to supply
the goods and services for resale within the State or a defined area of the
State only to that reseller;
(b)
exclusive purchasing, whereby the reseller agrees with the supplier to purchase
the products concerned only from the supplier, or another undertaking specified
by the supplier;
(c)
franchising, whereby one party grants to the other the right to exploit a
package of industrial or intellectual property rights relating to trade marks,
trade names, shop signs, utility models, designs, copyrights, know-how or
patents, for the resale of goods or the provision of services to end users.
“Know-how” means a package of non-patented practical information,
resulting from experience and testing by the franchisor, which is secret,
substantial and identified;
(d)
selective distribution, whereby the supplier agrees with the reseller to supply
goods and services only to those resellers satisfying certain professional or
technical requirements, while the reseller agrees not to purchase such goods
from, or sell them to, wholesalers or retailers outside the territory. Such
agreements may include quantitative limits on the numbers of resellers to be
appointed within the State or a defined part thereof;
(e)
non-exclusive distribution, whereby the supplier agrees with the reseller to
supply the goods and services for resale within the State or a defined area of
the State to the reseller but without any restriction on supplying other
resellers within that territory. Where
de
facto
the supplier enters an agreement with only a single reseller within the
territory, such an agreement does not constitute a non-exclusive agreement.
Article
3.
3. Subject
to the provisions of Articles 5 to
7
,
the Competition Authority certifies that, in its opinion, on the basis of the
facts in its possession, non-exclusive distribution agreements as defined in
Article
2(e)
do not contravene Section 4(1) of the Competition Act, 1991, as amended.
Article
4.
4. Subject
to the provisions of
Articles
5
to
7
,
the Competition Authority certifies that, in its opinion, on the basis of the
facts in its possession, an agreement in any of the categories defined in
Article
2(a), (b), (c)
and
(d)
does not contravene Section 4(1) of the Competition Act, 1991, as amended,
provided neither party to the agreement has a share in excess of 20% of the
relevant market.
Article
5
.
5. Notwithstanding
the provisions of
Article
2
,
this Certificate does not apply to any agreement which involves:-
(a)
any restriction on the freedom of the reseller to determine his own resale
prices. However, suppliers may recommend resale prices, provided:
i)
such recommendations indicate that the reseller is free to set his own resale
prices;
ii) the recommendation makes no references to margins arising from
applying the
recommended price;
iii) there is no requirement to display the recommended price; and
iv) no inducements are offered to secure compliance with the recommended
price.
(b)
any provision or combination of provisions which prevent resellers outside a
territory allocated to a particular reseller from supplying customers in that
territory in response to requests from such customers;
(c)
any non-compete restrictions which apply after the termination of the
agreement, other than the keeping of confidential and secret business
information.
An exception is made in the case of franchise agreements, provided that the
duration of such non-compete restrictions does not exceed one year after the
termination of the agreement.
Article
6.
6. Notwithstanding
the provisions of Article 2, this Certificate does not apply to exclusive
purchasing agreements in respect of (a) liquefied petroleum gas for resale in
cylinders, or (b) motor fuels.
Article
7
.
7. Notwithstanding
the provisions of
Article
2,
this
Certificate does not apply to agreements between suppliers of identical goods
or services, or of goods or services which are considered by users as
equivalent in view of their characteristics, price and intended use.
Article
8
.
8. The
Authority may amend this certificate, in particular, to exclude a particular
category of goods or services, where, in its opinion, the cumulative effects of
any existing agreements is such as to prevent effective entry to the market by
a new supplier.
For
the Competition Authority
______________________
Professor
Patrick McNutt
Chairperson
December
4 1998
Competition
Authority Licence
In
Respect of Agreements Between Suppliers and Resellers.
Article
1.
Pursuant
to
Section 4(2) of the
Competition Act, 1991, as amended, the Competition
Authority grants this Licence to the categories of agreements defined in
Article
2
,
to which only two undertakings are party and whereby one party, the supplier,
agrees with the other, the reseller, to supply certain goods and/or services
for resale within the State or any part of the State.
Article
2
.
9. Subject
to the provisions of
Articles
3
to
5
this
Licence applies to the following categories of agreement, provided that neither
party to an agreement as defined herein holds a share in excess of 40% of the
relevant market:-
(a)
exclusive distribution, whereby the supplier agrees with the reseller to
supply the goods and services for resale within the State or a defined area of
the State only to that reseller;
(b)
exclusive purchasing whereby the reseller agrees with the supplier to purchase
the products concerned only from the supplier, or another undertaking specified
by the supplier;
(c)
franchising, whereby one party grants to the other the right to exploit a
package of industrial or intellectual property rights relating to trade marks,
trade names, shop signs, utility models, designs, copyrights, know-how or
patents, for the resale of goods or the provisions of services to end users.
“Know-how” means a package of non-patented practical information,
resulting from experience and testing by the franchisor, which is secret,
substantial and identified;
(d)
selective distribution, whereby the supplier agrees with the reseller to supply
goods and services only to those resellers satisfying certain professional or
technical requirements while the reseller agrees not to purchase such goods
from or sell them to wholesalers or retailers outside the territory. Such
agreements may include quantitative limits on the numbers of resellers to be
appointed within the State or a defined part thereof.
Article
3.
10. Notwithstanding
the provisions of
Article
2,
this
Licence shall not apply in respect of any agreement which involves:-
(a)
any restriction on the freedom of the reseller to determine his own resale
prices. However, suppliers may recommend resale prices provided:
i)
such
recommendations indicate that the reseller is free to set his own resale prices;
ii)
the
recommendation makes no references to margins arising from applying the
recommended
price;
iii)
there
is no requirement that the reseller display the recommended price; and
iv)
no
inducement is offered to secure compliance with the recommended price;
(b)
any provision or combination of provisions which prevent resellers outside a
territory allocated to a particular reseller from supplying customers in that
territory in response to requests from such customers;
(c)
any
non-compete
restrictions which apply after the termination of the agreement, other than the
keeping of confidential and secret business information. An exception is made
in the case of franchise agreements, provided that the duration of such
non-compete restrictions does not exceed one year after the termination of the
agreement.
Article
4
.
(i) Notwithstanding
the provisions of
Article
2,
this Licence does not apply to any exclusive purchasing agreement in respect of
motor fuels which:
(a)
exceeds 10 years in duration, and
(b)
provides for any first option to renew upon termination.
(ii) Notwithstanding
the provisions of Article 2, this Licence does not apply to exclusive
purchasing agreements in respect of liquefied petroleum gas for resale in
cylinders.
Article
5.
11. Notwithstanding
the provisions of
Article
2,
this Licence does not apply to agreements between suppliers of identical goods
or services, or of goods or services which are considered by users as
equivalent in view of their characteristics, price and intended use.
Article
6
12. The
Authority may amend this Licence, in particular, to exclude a particular
category of goods or services, where, in its opinion, the cumulative effects of
any existing agreements is such as to prevent effective entry to the market by
a new supplier.
Article
7
13. The
licence shall apply from January 01 1999 until December 31 2003.
For
the Competition Authority
______________________
Professor
Patrick McNutt
Chairperson
December
4 1998
© 1998 Irish Competition Authority
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