Click here to download the Distribution and agency 2019 report, published by Getting the Deal Through.

Jurisdictions covered

The following 13 jurisdictions are covered in this report:

Belgium; Canada; China; Finland; Germany; Greece; India; Japan; Puerto Rico; Turkey; United Arab Emirates; United Kingdom; United States

Questions

The set of questions relating to the topic of Distribution and agency and answered by the guide for each jurisdiction covered include:

Direct distribution

• • May a foreign supplier establish its own entity to import and distribute its products in your jurisdiction?
• • May a foreign supplier be a partial owner with a local company of the importer of its products?
• • What types of business entities are best suited for an importer owned by a foreign supplier? How are they formed? What laws govern them?
• • Does your jurisdiction restrict foreign businesses from operating in the jurisdiction, or limit foreign investment in or ownership of domestic business entities?
• • May the foreign supplier own an equity interest in the local entity that distributes its products?
• • What are the tax considerations for foreign suppliers and for the formation of an importer owned by a foreign supplier? What taxes are applicable to foreign businesses and individuals that operate in your jurisdiction or own interests in local businesses?

Local distributors and commercial agents

• • What distribution structures are available to a supplier?
• • What laws and government agencies regulate the relationship between a supplier and its distributor, agent or other representative? Are there industry self-regulatory constraints or other restrictions that may govern the distribution relationship?
• • Are there any restrictions on a supplier’s right to terminate a distribution relationship without cause if permitted by contract? Is any specific cause required to terminate a distribution relationship? Do the answers differ for a decision not to renew the distribution relationship when the contract term expires?
• • Is any mandatory compensation or indemnity required to be paid in the event of a termination without cause or otherwise?
• • Will your jurisdiction enforce a distribution contract provision prohibiting the transfer of the distribution rights to the supplier’s products, all or part of the ownership of the distributor or agent, or the distributor or agent’s business to a third party?

Regulation of the distribution relationship

• • Are there limitations on the extent to which your jurisdiction will enforce confidentiality provisions in distribution agreements?
• • Are restrictions on the distribution of competing products in distribution agreements enforceable, either during the term of the relationship or afterwards?
• • May a supplier control the prices at which its distribution partner resells its products? If not, how are these restrictions enforced?
• • May a supplier influence resale prices in other ways, such as suggesting resale prices, establishing a minimum advertised price policy, announcing it will not deal with customers who do not follow its pricing policy, or otherwise?
• • May a distribution contract specify that the supplier’s price to the distributor will be no higher than its lowest price to other customers?
• • Are there restrictions on a seller’s ability to charge different prices to different customers, based on location, type of customer, quantities purchased, or otherwise?
• • May a supplier restrict the geographic areas or categories of customers to which its distribution partner resells? Are exclusive territories permitted? May a supplier reserve certain customers to itself? If not, how are the limitations on such conduct enforced? Is there a distinction between active sales efforts and passive sales that are not actively solicited, and how are those terms defined?
• • May a supplier restrict or prohibit e-commerce sales by its distribution partners?
• • Under which circumstances might a distribution or agency agreement be deemed a reportable transaction under merger control rules and require clearance by the competition authority? What standards would be used to evaluate such a transaction?
• • Do your jurisdiction’s antitrust or competition laws constrain the relationship between suppliers and their distribution partners in any other ways? How are any such laws enforced and by which agencies? Can private parties bring actions under antitrust or competition laws? What remedies are available?
• • Are there ways in which a distributor or agent can prevent parallel or “grey market” imports into its territory of the supplier's products?
• • What restrictions exist on the ability of a supplier or distributor to advertise and market the products it sells? May a supplier pass all or part of its cost of advertising on to its distribution partners or share in its cost of advertising?
• • How may a supplier safeguard its intellectual property from infringement by its distribution partners and by third parties? Are technology-transfer agreements common?
• • What consumer protection laws are relevant to a supplier or distributor?
• • Briefly describe any legal requirements regarding recalls of distributed products. May the distribution agreement delineate which party is responsible for carrying out and absorbing the cost of a recall?
• • To what extent may a supplier limit the warranties it provides to its distribution partners and to what extent can both limit the warranties provided to their downstream customers?
• • Are there restrictions on the exchange of information between a supplier and its distribution partners about the customers and end users of their products? Who owns such information and what data protection or privacy regulations are applicable? (If applicable, to the extent the EU Schrems decision affects the answer, with regard to the sharing of information between the US and Europe, discuss the issue and how it can be addressed).
• • May a supplier approve or reject the individuals who manage the distribution partner’s business, or terminate the relationship if not satisfied with the management?
• • Are there circumstances under which a distributor or agent would be treated as an employee of the supplier, and what are the consequences of such treatment? How can a supplier protect against responsibility for potential violations of labour and employment laws by its distribution partners?
• • Is the payment of commission to a commercial agent regulated?
• • What good faith and fair dealing requirements apply to distribution relationships?
• • Are there laws requiring that distribution agreements or intellectual property licence agreements be registered with or approved by any government agency?
• • To what extent are anti-bribery or anti-corruption laws applicable to relationships between suppliers and their distribution partners?
• • Are there any other restrictions on provisions in distribution contracts or limitations on their enforceability? Are there any mandatory provisions? Are there any provisions that local law will deem included even if absent?

Governing law and choice of forum

• • Are there restrictions on the parties’ contractual choice of a country’s law to govern a distribution contract?
• • Are there restrictions on the parties’ contractual choice of courts or arbitration tribunals, whether within or outside your jurisdiction, to resolve contractual disputes?
• • What courts, procedures and remedies are available to suppliers and distribution partners to resolve disputes? Are foreign businesses restricted in their ability to make use of these courts and procedures? Can they expect fair treatment? To what extent can a litigant require disclosure of documents or testimony from an adverse party? What are the advantages and disadvantages to a foreign business of resolving disputes in your country’s courts?
• • Will an agreement to mediate or arbitrate disputes be enforced in your jurisdiction? Are there any limitations on the terms of an agreement to arbitrate? What are the advantages and disadvantages for a foreign business of resolving disputes by arbitration in a dispute with a business partner in your country?