Exclusive Distribution Agreements in the EU
The judgment of the European Court of Justice (ECJ) delivered on 8 May 2025 in the case of Beevers Kaas (C-581/23) is expected to have significant implications for companies, particularly in the context of exclusive distribution agreements. The European Court established that, in the exclusive distribution networks, the company which organises the system, must grand to each distributor a territorial exclusivity and, at the same, impose a ban on active sales in the territory of other distributors of the network. The consequences of a contractual loophole are severe.
Each distributor of the network may sell in other territories and the supplier will be liable to pay damages to each exclusive distributor which undergo parallel sales of other distributors in its territory.
What happened in the Beevers Kaas case and why is this judgement so impactful?
This case starts when a supermarket chain which distributed Cono’s cheese in the Netherlands started to resell it in Belgium, thereby damaging Beevers Kaas, which was the sole distributor of the same cheese in Belgium since 1993.
The supermarket chain claimed that it was entitled to sell the cheese not only in the Netherlands but also in Belgium: the distribution contract with the cheese producer did not contain any direct prohibition on sales out of the Netherlands and, in any case, it was contrary to EU competition law to imply such restriction. The producer and the Belgian exclusive distributor affirmed that none of the cheese producer’s distributors was selling in the territory of other exclusive distributors and this implied that there was a direct restriction on parallel sales.
The question that arose was to what extent restrictions on active sales in an exclusive distribution system are compatible with EU competition law – particularly under Article 101 TFEU – and the Vertical Block Exemption Regulation (VBER) .
Under EU competition law, exclusive distribution agreements between distributor and supplier should meet certain conditions.
According to the antitrust rules, a supplier is not allowed to prohibit a distributor to sell in a certain territory, UNLESS this territory is under an exclusive distribution system. The simple existence of the exclusivity right on a territory granted by a producer to a distributor is not enough for distributors outside of the agreement to have to refrain from selling in a certain area: what the EU judgment clarifies is that a distribution system based on territorial exclusivity is validly put in place, when the supplier ensures, by means of agreements and contractual documents, that all the distributors of its newtork do not to sell out of their granted territory.
This is the so called “parallel imposition requirement”, which “requires the supplier to protect its exclusive distributor against active selling into the exclusive territory by all its other distributors/buyers” explained Advocate General Medina in the press release and further codified in the final judgment of the ECJ. This clarification from the ECJ removes a previously ambiguous condition in EU competition law and removes legal grey zones, where suppliers could potentially benefit from the Vertical Block Exemption Regulation without taking on the responsibility of protecting their exclusivity agreements.
Conclusions
In conclusion, it is crucial for suppliers to have in place exclusive distribution agreements, with protective clauses which prohibit explicitly each distributor to sell the supplier’s products in other territories granted by the supplier to other exclusive distributors.
Actually, it is crucial for the preservation of the exclusivity distribution system that the supplier receives the active consent from each exclusive distributor to not sell outside of the territory granted by the supplier in the agreement.
The inaction and non – compliance might be very risky for the supplier: the supplier might be held liable for damages by one or more of its distributors whose exclusive rights are not sufficiently protected.
In light of the European Court of Justice (ECJ)’s ruling delivered on 8 May 2025 in the case Beevers Kaas (C-581/23) it is advisable to verify and revise the already existing exclusive distributorship agreements making sure they are in alignment with EU law.
JUDGMENT OF THE EU COURT OF JUSTICE, 8 May 2025, Case C‑581/23
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