EU COMPETITION LAW: EXCLUSIVE SUPPLY AGREEMENTS
In the context of the European Union, competition law is a crucial tool to ensure fair competition and protect consumers. One area of competition law that has received a lot of attention and scrutiny in recent years is the use of exclusive supply agreements.
Under EU competition law, an exclusive supply agreement is an agreement between two or more companies where one company agrees to supply a particular product or service exclusively to the other company. This type of agreement can be beneficial for both parties involved, but it can also pose serious competition issues.
The primary concern with exclusive supply agreements is that they can limit competition in the relevant market. By granting exclusivity to one company, competitors in the market may be unable to access the same product or service, leading to a lack of choice for consumers and potentially higher prices.
EU competition law prohibits exclusive supply agreements that have the potential to harm competition in the market. However, not all exclusive supply agreements are automatically illegal or anti-competitive. The European Commission must assess each agreement on a case-by-case basis to determine whether it meets the requirements of EU competition law.
To determine whether an exclusive supply agreement is compatible with EU competition law, the European Commission will consider a number of factors. These include the market power of the parties involved, the duration and scope of the agreement, and whether there are any alternative suppliers or products available in the market.
If the European Commission determines that an exclusive supply agreement breaches EU competition law, it can impose fines and other sanctions on the companies involved. These can be significant, with fines of up to 10% of a company`s global turnover.
In recent years, there have been a number of high-profile cases involving exclusive supply agreements under EU competition law. For example, in 2016 the European Commission fined the chemical company AkzoNobel €26 million for entering into an anti-competitive exclusive supply agreement with a competitor.
Although exclusive supply agreements can have benefits for both parties involved, companies must be careful to ensure they do not breach EU competition law. By understanding the requirements of EU competition law and seeking legal advice where necessary, companies can ensure they remain compliant and avoid the risk of fines and reputational damage.