Commercial distribution contract is the contract by which an independent entrepreneur undertakes the obligation towards the supplier to sell on a permanent and stable basis the latter's products[1]. The notable difference between the distribution agreement and the commercial agency agreement is the fact that the distributor acts in his own name and on his own behalf and therefore bears the business risk himself, unlike the commercial agent, who acts in the name and on behalf of the represented and, therefore, the risk of the disposal of the products is borne by the latter.
A corollary of the principle of the autonomy of private will is the principle of freedom of contracts, which is indirectly established by article 361 of the Civil Code as an expression of economic freedom, which is also an individual right guaranteed by article 5§1 of the Constitution[2]. The exclusive distribution contract is also an expression of the principle of freedom of contract. This contract is a peculiar perpetual liability contract of commercial cooperation, on the basis of which one party, who is the producer or wholesaler, is obliged to sell exclusively to the other party, who is the distributor, the goods agreed upon in relation to a certain geographical area and which the distributor then resells to third parties in his own name, on his own account and at his own operational risk, i.e. acting as an independent professional intermediary in the trade.
In addition, with the exclusive distribution contract, the distributor usually undertakes the obligation to follow the manufacturer's instructions regarding the appearance and quality of the products, to promote sales, to protect the interests and reputation of the manufacturer, to have the necessary stocks in order to avoid shortages in the market, maintaining at its own expense an appropriate organization and infrastructure, while even when it has the right to determine the resale prices of the products to third parties, it is not excluded that maximum or minimum price limits have been contractually determined.
The concept in particular of exclusivity in the distribution of certain products is that the producer undertakes by the relevant contract not to deliver goods to third-party competitors of the exclusive distributor within the distribution area and conversely the exclusive distributor is obliged, as a rule, not to distribute directly competing products in the same area[3].
Of particular interest is the distributor's relationship not only with its counterparty but also with the other exclusive distributors of the same producer or wholesaler who operate in a different zone of exclusive distribution in the light of competition law. A problem arises in this case, when the activity of the exclusive distributor extends beyond its territorial area into the zone of another distributor. The permissibility of sales then depends on their active or passive nature. Specifically, according to article 2 of the Civil Code 69/2005 the term "active sales" refers to:
- in actively approaching individual customers within the exclusive territory or within the exclusive customer group of another distributor
- to actively approach a specific group of customers or customers in a specific territory that has been exclusively allocated to another distributor, through advertising in the mass media or other promotional actions specifically aimed at this group of customers or customers located in the specified territory the
- in the establishment of warehouses or distribution stations in the exclusive territory of another distributor.
Conversely, passive selling is defined as responding to demand expressed voluntarily by individual customers, including the distribution of goods or services to them and general advertising or promotion in the mass media or on the Internet, which reaches customers located in exclusive territories or belonging to the customer groups of other distributors but which requires a reasonable way to reach customers outside those territories or customer groups.
As it becomes clear from the above, active sales by a distributor in the exclusive distribution area of another distributor are prohibited sales, while passive sales are in principle permissible, as long as the approach to customers belonging to the other area is done in a reasonable manner. A reasonable way is considered, for example, to respond to the demand of the customer, who himself approaches the distributor within his exclusive territory. Having a website is considered a form of passive selling, which is always allowed as it is a reasonable way for customers to approach the exclusive distributor. That is, as long as the customer visits the distributor's website, gets in touch with him and then draws up a sales contract with him, this sale is passive in nature and is always allowed.
Restrictions on vertical agreements[4] they also derive directly from Community Competition Law. Vertical agreements are defined as agreements between businesses operating at a different level (e.g. the agreement between a producer, wholesaler and distributor), while their restrictions refer to the conditions under which the parties can procure, sell or resell certain goods or services (eg geographic, customer restrictions). The legislative framework consists of both the general clause prohibiting collusion (Article 81 CEC) and Regulation 330/2010 on the block exemption for vertical agreements, which replaced the corresponding previous Regulation 2790/1999[5].
With these characteristics, therefore, the exclusive distribution contract is differentiated from that of the commercial agent, since the independent mediator, who is assigned on a permanent basis for a fee (commission) and usually for a specific area or to negotiate on behalf of another, is characterized as a commercial agent. i.e. of the represented, the sale or purchase of goods or to negotiate and conclude these contracts on behalf, but also in the name of the represented, i.e. in contrast to the exclusive distributor, who acts in the name and on his behalf, the commercial agent performs auxiliary mediation work in the name and on behalf of the represented himself[6]. An intermediary type of person, who also mediates in the operation of trade, is the ordering agent, i.e. the person who performs the above operations in his own name, just like the exclusive distributor, but on behalf of the represented person.
Selective distribution usually concerns luxury or high-tech goods, where a network is required, which ensures authenticity, the existence of complete lines of goods, service, warranty, maintenance, proper advertising, presentation, experience of sellers, etc. .There is no territorial exclusivity here, but there is an obligation on the distributors not to sell the goods in question to unauthorized resellers. A network of this type is considered "closed" in the sense that care is taken to ensure that the goods do not fall into the hands of third party traders and that the producer should take steps to guard this tightness and prevent the network from breaking up[7].
Through the selective distribution of the tightness that characterizes it, consumer service is promoted, while by strengthening and protecting the networks, the reputation of the product is protected and competition between similar products is strengthened. The selection of the distributors and the entry into the network must be made with uniform objective criteria, concerning the professional specialization of the distributors, their experience, their staff, their facilities.
In the decision Metro/Cartier (C-376/92) the ECJ considered legal the tightness, with regard to the selective distribution network, either by prohibitions on resale, or by similar clauses, such as the exclusion from the manufacturer's guarantee of products, sold by sellers outside the network, clarified , however, that the reverse is also not true, that tightness is an attribute of the network, necessary for its compatibility with article 85 (now 81 SynthEK), stressing that it would be paradoxical to treat the most closed ones more favorably than the most open ones shapes[8].
In the decision Pierre Fabre Dermo–Cosmit istick SAS/Profit issitent de l'Authoritit is de la competition and Minister de lIt'sconomie, de l'Industrie et de l'Emploi (C-439/09) the ECJ pointed out that the organization of such a selective distribution network does not fall within the prohibition of Article 101, paragraph 1, TFEU for the protection of competition, as long as the choice of resellers is based on objective criteria of quality character, which are set uniformly against all potential resellers and applied without discrimination, the characteristics of the product in question make such a distribution network necessary to maintain the quality and ensure the proper use of the products in question and, finally, the criteria laid down do not exceed the necessary measure[9].
[1] George D. Triantafyllakis, Commercial Law Recommendations, page 80.
[2] See AP 455/2014, Bank of legal information law (intrasoft international): "...freedom of contract means a) freedom of the individual to enter into or not enter into a contract both in general and with a specific person as counterparty (freedom of choice of the counterparty) and b) freedom to determine the content of the contract».
[3] M. Varela/G. Triantafyllakis, Commercial Law Applications, volume A, Edited by G. Triantafyllakis, Nomiki Bibliotheki AEVE publications, 2007, p. 188.
[4] See 9656/2013 BR THESS, Bank of legal information law: "Such permissible vertical agreements are those which are of minor importance because they are concluded between undertakings whose market share in the relevant market does not exceed 10%. In the case, however, in which they include strict competitive vertical restrictions of the "black list", which is included in article 4 of the Regulation, article 81 par. 1 of the Convention applies to them as well (see also article 1 par. 1 para. a, 2 of Law 703/1977, StE 128/2009 Public Law). That is to say, such vertical agreements are automatically void, according to the second paragraph, but provided that their operation has significant effects on trade between the Member States, as well as on competition. Finally, especially for franchise agreements, the obligations of the parties contained in them can be considered as necessary to maintain the common identity and reputation of the franchise network and therefore not fall within the scope of Article 81 par. 1 of the Convention or, even if they fall, meet the exemption conditions of paragraph 3. Furthermore, in vertical agreements contained in franchise contracts, a post-contractual obligation of non-competition may legally be included, in accordance with the provision of article 5 of Regulation (EC) 2790/1999, i.e. any direct or indirect obligation of the licensee, by which after the termination of the contract he cannot buy, sell or resell goods or services referred to in the contract. The post-contractual obligation of non-competition, in accordance with the above provisions, must be limited to the premises where the licensee carried out its business during the contract, be necessary for the protection of the know-how transferred from the licensor to the licensee, and to be limited in time to one year after the termination of the contract (see D. Kostakis, To franchising and the new Regulation (EC) 2790/1999 of the Commission on the application of article 81 par. 3 of the Treaty to certain categories of vertical agreements and harmonized of minutes, DEE 2000, 712, EfThes 2051/2010 op.)'. See and AP 1063/2011, Bank of legal information law
[5] Dimitris Steph. Kostakis, The new Regulation 330/2010 of the Commission for the implementation of article 101 par. 3, www.franchiseportal.gr
[6] See Ef. Athens 5826/2010, Review of Commercial Law, Volume XV, 2011, issue 1The.
[7] Lampros Kotsiris – System of selective distribution and parallel imports under Community law, Opinion, Review of Commercial Law, volume XB, issue 4The, pp. 977 ff.
[8] Christopher Stothers – Parallel Trade in Europe: Intellectual Property, Competition and Regulatory Law, Hart Publishing, 2007 USA, p. 409 – In the present case Cartier refused to grant a warranty for watches sold by the "cash and carry" store chain Metro, which was not an authorized distributor. The matter reached the Court of Justice of the European Union (formerly ECJ), which ruled that as long as Cartier maintained a selective distribution network within the meaning of Article 81 of the Treaty, it had the right to grant a guarantee only for sales made by selected distributors, which he had included in the system.
[9] www.curia.europa.eu – Judgment of the Court (Third Chamber) of 13 October 2011. Pierre Fabre Dermo-Cosmétique SAS v Président de l’Autorité de la concurrence and Ministre de l’Économie, de l’Industrie et de l’Emploi – The company Pierre Fabre prohibited its resellers, included in its selective distribution network, from selling goods over the Internet. The CJEU (formerly ECJ) ruled that it is up to the requesting court to examine whether the disputed contractual clause, which de facto prohibits all forms of sales via the internet, can be objectively justified, the Court should not provide it with interpretive evidence in this regard of Union law, which will allow it to decide. The Court did not accept, in relation to freedom of movement, as a justification for the prohibition of sales via the Internet, the arguments derived from the need to provide personal advice to the customer and ensure his protection against the incorrect use of products, in the case of sales contact lenses and medicines for which a prescription is not required. Pierre Fabre Dermo‑Cosmétique also refers to the need to maintain the prestige image of the products in question. The aim of preserving the reputation of a product cannot be a legitimate reason for the restriction of competition and cannot therefore justify the assessment that a contractual clause pursuing this aim does not fall within the scope of Article 101(1) TFEU . Based on the above considerations, the answer to the first part of the submitted question must be that Article 101, paragraph 1, TFEU has the meaning that a contractual clause, in the context of a selective distribution system, which requires the sales of cosmetics and personal care products to be carried out in a physically existing space with the mandatory presence of a qualified pharmacist, resulting in the prohibition of the use of the internet for said sales, constitutes a restriction by object within the meaning of this provision if, after an independent and specific examination of the content and purpose of said contractual clause as well as the legal and economic framework within which it is included, it follows that, taking into account the properties of the disputed products, the clause in question is not objectively justified. Pierre Fabre Dermo-Cosmétique is a company of the Pierre Fabre group. Its main activity is the manufacture and marketing of cosmetics and personal care products and it has various subsidiaries, among which are Klorane, Ducray, Galénic and Avène cosmetics laboratories, whose cosmetics and personal care products are sold in the French and European markets, with the brands in question, mainly in pharmacies. The products in question are cosmetics and personal care products, which do not fall under the category of medicines and are therefore not subject to the pharmacists' monopoly provided for in the public health code. In the year 2007, the Pierre Fabre group had a share of 20 % in the French market of the products in question. The distribution contracts for the above products, which carry the Klorane, Ducray, Galénic and Avène brands, stipulate that sales must be carried out exclusively in a physically available space and in the mandatory presence of a licensed pharmacist.
THOMAS STEF. HAPPY
LAWYER
English 
Greek 
French 
Chinese 
German