Commercial agency agreements in the European Union apply where a legal or actual person (the agent) is vested with the power to negotiate and/or conclude contracts on behalf of another legal or actual person (the principal), either in the agent’s own name or in the name of the principal, for the purchase or sale of good and services by the principal. This GT Advisory reviews commercial agency agreements in EU competition law.
Exemption by Definition
1. In the Notice of the European Commission of 24 December 1962, commonly referred to as the Christmas Message, the Commission indicated that agency agreements generally do not fall within the prohibition of Article 101(1) of the Treaty on the Functioning of the European Union (TFEU). This privilege, however, applied only where the agent did not engage in activities that are proper to an independent trader. The Christmas Message stated that the decisive criterion to distinguish an agent from an independent trader was the extent of the agent’s responsibility for financial risks connected with the agent’s performance. This approach towards agency agreements was confirmed by the European Court of Justice (ECJ) in the Suiker Unie case where the Court ruled that Article 101(1) TFEU only did not apply to clauses in an agreement between an agent and a principal in circumstances where the agent is to be regarded merely as an auxiliary, forming an integral part of the principal’s undertaking.
No Dual Role
2. In Pittsburgh Corning the Commission held that an agent could not be regarded as a true auxiliary if the agent also carried on business as an independent manufacturer or distributor of products unconnected with the agency.
Read the full GT Alert, “Commercial Agency Agreements in EU Competition Law“