Recent UOKiK activity concerning distribution agreements—the ABB search, KIA decision and Dell decision—shows growing determination to detect and prosecute unlawful distribution practices. It also shows how often businesses design systems contrary to competition law.
This may be because illegality is not intuitive. We instinctively recognise that agreeing minimum prices or market-sharing with competitors is wrong. Similar arrangements with our own distributors may seem different: surely this concerns distribution of one producer’s goods, rather than competition between producers?
Basic rules are therefore worth recalling for distribution and all vertical agreements, where parties operate at different production or trading levels. This is not an exhaustive list, and an exception below does not ensure complete safety. Market shares, competition between parties and other circumstances must be assessed to determine block exemption under Poland’s Council of Ministers Regulation of 22 May 2023 or Commission Regulation 2022/720 of 10 May 2022. Where the agreement falls outside exemption, individual exemption under Article 8(1) of the Competition and Consumer Protection Act or Article 101(3) TFEU requires further analysis.
The entire legal and commercial context matters. Effects and enforcement count more than wording alone.
Minimum or fixed resale prices (RPM)
Agreeing minimum or fixed resale prices is absolutely prohibited. Maximum or recommended prices are possible only if their economic context does not produce an equivalent effect. Even a producer wishing to preserve product image cannot agree a price floor: distributors must remain free to offer any discount.
Indirect arrangements are prohibited too, including fixing margins, permitted discounts or making distributor discounts and other benefits conditional on maintaining resale prices.
Allocating territories or customer groups
Restrictions on where or to whom buyers may sell are generally prohibited. Exceptions depend on the system: exclusive distribution, reserving a territory or customer group to the supplier or at most five distributors and excluding others’ active sales; selective distribution, admitting only distributors meeting criteria and prohibiting sales to unauthorised distributors; or open distribution. Exceptions may include:
- under specified conditions, restricting active sales into reserved territories or customer groups, including targeted advertising, geographically targeted website languages and promotions;
- restricting wholesalers’ sales to end users;
- restricting sales to unauthorised distributors located in territories where the supplier operates selective distribution.
The complex exceptions require detailed analysis whenever allocation is proposed. An internal analysis documenting the justification is good practice.
As with RPM, context rather than literal wording controls. A prohibited objective may be achieved directly or indirectly through combinations of penalties, such as cancelled discounts or termination threats, and incentives, such as extra discounts or marketing budgets.
Restrictions on internet sales
Restrictions preventing distributors or their customers from effectively using the internet are unlawful where they restrict permissible territories or customers as described above. An online sales ban, for example, limits passive sales—customer-initiated purchases not prompted by active selling—to end users outside the distributor’s physical trading area.
Every such clause therefore requires a detailed two-stage assessment against the applicable selective, exclusive or open system and its particular exceptions.
Other online restrictions, such as bans on third-party marketplaces including Allegro or Amazon, or particular advertising restrictions, are permitted. Advertising restrictions cannot exclude an entire online channel, such as search engines, price comparison services or the distributor’s own online shop.
Non-competes
Obligations preventing a buyer from manufacturing, purchasing or selling competing products are unlawful if indefinite or longer than five years. An exception applies where the supplier provides the premises or land as owner, tenant or otherwise: the restriction may last throughout occupancy.
The same treatment applies to obligations to buy more than 80% of total requirements for the relevant products and substitutes from the supplier.
Thus, even an indefinite or longer distribution agreement should limit non-competes and purchasing exclusivity above 80% to no more than five years.
Selective distributors also cannot be prohibited from selling particular identified competing suppliers’ goods.
Post-term non-competes are generally impermissible. An exception requires all of the following:
- coverage only of substitutes for the agreement’s goods;
- restriction to the premises or land where the buyer operated;
- necessity to protect transferred know-how;
- duration no longer than one year, except prohibitions on using or disclosing know-how, which need no time limit.
Finally, online intermediation platforms cannot prevent business users offering end users better terms on competing third-party platforms. This concerns not just price but other conditions. The infringement may be express or indirect, such as better positioning in return for not offering better terms elsewhere.
A requirement not to offer better terms through the seller’s own direct channels, such as its website, is outside this absolute prohibition.
Conclusion
These are particularly serious vertical restrictions. Individual exemption is not impossible, but difficult and exceptional.
Risks include UOKiK or Commission fines up to 10% of annual revenue, with vertical infringement penalties rising rapidly. Controlling entities may also be liable, and managers may face fines for intentional infringements.
In KIA, decision DOK-5/2024, UOKiK fined KIA and eleven dealers over PLN 405 million and five managers over PLN 1.5 million in total.
Infringing clauses are also automatically void, and harmed third parties may pursue damages through private enforcement.
The cumulative consequences can be severe. Distribution contracts and implementation practices deserve close review, requiring cooperation between the business staff designing systems and managing distributor relationships and internal or external competition lawyers.
