Distributor, Agent Or Both? The Commission's Working Paper On "Dual Role" Agents

• Published date: 30 March 2021
• Subject Matter: orporate/Commercial Law, Anti-trust/Competition Law, Contracts and Commercial Law, Antitrust, EU Competition
• Law Firm: Bristows
• Author: Ms Sophie Lawrance, Helena Connors and Emma Mackie

As mentioned previously (for example here), the European Commission is currently reviewing the Vertical Agreements Block Exemption ("VABE") and corresponding Vertical Guidelines. In response to a public consultation on VABE, interested parties requested further clarity on how competition law applies to undertakings that act as both distributor and agent to the same supplier.

To that end, the Commission recently published a Working Paper setting out the current guidelines on so-called "dual role" agents. The Paper is limited in scope; it focusses on markets comprising differentiated products with distinct characteristics that can be separated into those that are covered by an agency agreement and those that are distributed independently. It does not discuss situations where the dual role agent is an online platform which is currently a key topic in ongoing investigations such as that into Amazon in connection with its use of data obtained from its Marketplace. It does, however, provide helpful guidance on the criteria for "genuine" agency agreements outside of that platform context.

Agency agreements and Article 101

Whether a vertical relationship falls within the scope of Article 101 TFEU, which prohibits anti-competitive agreements and concerted practices, depends on the nature of the relationship in question. A distribution agreement will generally fall within Article 101 unless it is exempted under VABE, whereas a genuine agency agreement is outside the scope of Article 101.

The Working Paper sets out the relevant conditions for a genuine agency agreement. It is only in very narrow circumstances that an agency agreement will be deemed to be "genuine".

For these purposes, the requirements of the Commercial Agents Directive are not relevant. Rather, a competition-specific analysis has to be carried out. According to that analysis, an agency relationship will not fall within the scope of Article 101 TFEU if the agent bears no, or only insignificant, risks of the three following types:

1. Contract-specific risks related to the contracts concluded by the agent on behalf of the principal;
2. Risks related to market-specific investments (i.e. investments specifically required for the type of activity for which the agent has been appointed by the principal); and
3. Risks related to other activities undertaking in the same product market to the extent that the principal requires the agent to undertake such activities at the agent's own risk.

The principal should fully...