Mbs Commercial Law June And July 2009

Munich, June and July 2009 Dr. Martin Rothermel, Taylor Wessing

Commercial Law

Part A – Commercial: Typical Agreements Part B – Warranty and Liability etc.Part C – International Business and German/European LawPart D – DistributionPart E – Antitrust Law

-1-

Content

A. Commercial: Typical Agreements – an overview • Supply and Sale Agreements (including: purchase contracts, contracts for work,

service contracts, terms and conditions, etc.) • Distribution Agreements (including: agency agreement, reseller agreements, etc.)• Loan Agreements• Other Agreements

B. Warranty and Liability under German Law and the Convention for the International Sale of Goods• Warranty• Guarantee• Liability • Product Liability

C. International Business and German / European Law• Applicable Law and Choice of Law • Competent Jurisdiction and Choice of Venue Clauses• International Arbitration and Arbitration Clauses

D. Distribution • Agency versus Distributor Agreements• Antitrust (Cartel) law in Vertical Agreements

E. Antitrust Rules on Vertical Agreements

-2-

Glossary

BGB = German Civil Code

HGB = German Commercial Code

GWB = Law against restraint in competition

…

-3-

A. Typical Agreements

-4-

A. Question: Starting Business – what agreements do we need?

-5-

A. Typical Agreements – an overview

Sale and Purchase Agreements

Rental Agreements

Specialty: Lease Agreements

Service Agreements

Specialty: Employment

Agreements for work results

Specialty: Supply of goods to be manufactured

Loan Agreement

Real Estate, Mortgage, etc.

General Terms & Conditions (all of above and below)

Agency Agreements

Commission Agent

Distribution & Franchise Agreements

§§ 433 etc. BGB

§§ 535 etc. BGB

§§ 433, 535, etc. BGB

§§ 611 etc. BGB

§§ 611 etc. and other BGB

§§ 631 etc. BGB

§§ 651 etc. BGB

§§ 488 etc. BGB

§§ 873,1113 etc. BGB

§§ 305 etc. BGB

§§ 84 etc. HGB

§§ 383 etc. HGB

§§ various – see above

-6-

B. Warranty and Liability, etc.

-7-

B. I. Basic differentiation

-8-

B. I. Please differentiate

Outline

Cause

Moment

Consequence

Warranty1

Guarantee2

Liability3

� Defect in quality

(§ 434 BGB)

� Defect in title

( § 435 BGB)

� Transfer of risk(defect in quality)

� Transfer of title (defect in title)

� Subsequent performance

- Replacement

- Rectification

� Avoidance (withdrawal)

� Price reduction

� Guarantee for (§ 443 BGB as example):

- Quality

- Durability

- etc.

� Relevant moment:

- Transfer of risk

- Guarantee period

No default required

� As agreed

� Breach of obligatione.g.: - Defect, delay- Other obligation- Strict liability

� Breach of obligation

Default required (notstrict liability)

� Compensation

Please Note: Difference betweenliability for default and guarantee

� Compensation

-9-

B. II. Warranty

-10-

B. II. 1. Warranty

� Defect in quality (§ 434 BGB)

� Defect in title (§ 435 BGB)

� „Agreed Quality“

- Prototypes (with acceptance)

- Specification

- etc.

� Explain „use“

� Explain Durability (Service Level)

� Explain Destination

� Passing of risk is important; INCOTERMS?

� Please note the inspection obligation in § 377 HGB

� etc.

Statutory Law Practical Tipps

-11-

B. II. 2. Statute Limitation for warranty

Period

2 yearsregular

5 yearsBuildings

30 yearsProperty rights

Statute Limitation

Start

§ 438 Abs. 2:

Please note:

- Suspension in the event of negotiations (§ 203 BGB)

- Suspension by pursuit of rights (§ 204 BGB)

- Beginning a new if acknowledged (§ 212 BGB)

In case of land the limitation begins upon its being handed

over, in other cases upon delivery

-12-

B. II. 3. Specialty: Consumer warranty rights

Sale of consumer goods (§§ 474 ff. BGB)

� Mandatory Provisions: warranty rights of consumers may not be limited in advance

- Neither with respect to claims

- Nor with respect to statute limitation: at least one year (for used goods) or longer

� Presumption: defect in quality existent at passing of the risk if defective within first 6 months thereafter

-13-

B. II. 3. Specialty: Consumer warranty rights

Right of recourse (§§ 478, 479 BGB)

Manufactureror Supplier

Consumer

Buyer/Supplier Buyer/Supplier Buyer/Supplier Retailer

� Recourse within chain of delivery

• Warranty rights of consumer

• No period of grace• Reimbursement of expenditures • Reversal of burden of proof • Statute limitation at least 2 months after fulfillment of rights by claiming tier• Applicable for whole chain• No exclusion in advance – unless not compensated

Manufacturerbears costs of

defects

-14-

B. II. 4. Subsequent performance by replacement or rectification

Subsequent Performance

Typical place of goods

Place of performance

Choice of purchaser

Place

Measure

Costs

Reasonable forseller

Replacement?

Rectification?

What if delivered elsewhere?

Details:

� Costs of seller

� Costs of purchaser

Details:

� Costs of seller

� Costs of purchaser

Replacment?

Rectification?

neither nor Other rights• Avoidance• Price reduction

?

§ 439 Abs. 2 BGB

The seller must bear all expenditure required for the purpose of

supplementary performance

-15-

B. III. Guarantee

-16-

B. III. Guarantee

Basics

BGB Consequences

� Manufacturer‘s or Seller‘s guarantee

� Terms are decisive

� Detailed provisions necessary

Please note: In English language no clear distinction between warranty and guarantee e.g. „warrants“, „guarantees“, „represents“, „…“ – clarify that!

-17-

B. IV. Compensation for damages

-18-

Defects Strict liability„Producer liability“

� Compensation � Compensation � Compensation

� Delivery of defectiveproducts

� Compensationwithout default

� Default in obligations

� Seller � Producer

� Labeler

� Importer

� Producer

B. IV. Compensation rights

Outline (1)

Content

Basis

Who

Otherobligations

� Compensation

� Default in otherobligations

� Seller

-19-

Defects Strict liability„Producerliability“

� Description

� Quality

� Exculpation

� ??? � Exculpation

� Qualityassurance

� No limits � Limitation- Personal injury:

85 Mio. EUR

- Other: ?

� No limits

� Nicht: Vermögens-schaden

� Buyer � Buyer

� Enduser

� Buyer

� Enduser

B. IV. Compensation rights

Outline (2)

Prevention

What

Claimant

Otherobligations

� Exculpation

� No limits

� Buyer

-20-

B. IV. 1. Liability for contractual obligations

Liability for defects and other obligations

� Defects: as above

� Other obligations resulting from contract

-21-

B. IV. 2. Strict liability

Liability without default

Construction

Liability without default

Product not safe = less safety than reasonably expected

� DIN, ISO, GPSG etc.� Reasonableness

� Expectation

Product is not safe

Fabrication Instruction

Theoretically Important

No liability, if- Not marketed- Based on mandatory rules - Not to defect/avoid

Manufacturer, Labeller, Importer: Mutual liability

Liability for- Personal injuries - Damages in privately used goods

+

� State of the art

� Current knowledge

-22-

B. IV. 3. Liability as producer

Liability as producer

Construction

Default in general obligations

� Certification rules� State of the art� Reasonability

� Expectation

Defective product, product is not safe

Fabrication Quality Organisation Instruction Surveillance Reaction

… … … … … … …

� Current knowledge

Case law

+

-23-

B. IV. 4. Compensation

Liability

� Breach of obligation

� DefaultPrecondition

Consequence

Practical Tips

� Compensation of damages

� No differentiation as to subsequent damages

� Limitation in T&C difficult

Examples:- Defects (not in all cases default of seller – no obligation

for inspection)

Amount� Causality!

- Everything predictable- Within scope of provision

-24-

C. International Business and German / European / International Law

-25-

(1) Example – taken from an international distribution agreement

C. International Business

-26-

C. International Business


-27-

Example

Manufacturer, Seller

Distributor, Purchaser

Germany Contractual relationship Foreign Country

• Which law?

• Which choice of law?

• Which court?

• Which choice of venue?

Distribution Agreement

Supply AgreementsManufacturer,

SellerDistributor, Purchaser

C. International Business – A continuous example will explain the basics (distribution agreement)

• Arbitration?

I

II

III

IV

V

-28-

C.I. Which Law

-29-

C. I. 1 Differentiation between intra European cases and involvement of third countries

Outline: Which law to apply?

� Rome Convention of 1980 for contractual obligations („EVÜ“)

� „Transformed“ into EGBGB in Germany

- contractual obligations (Art. 27-37EGBGB) and

- non contractual obligations (Art. 38-42 EGBGB)

� Rome-I-Regulation for contractual obligations – coming 12/2009

� Rome-II-Regulation for non contractual obligations – effective since 01/2009

� National law (similar principles):

- freedom of choice of law

- grouping of contacts or place of

contract = center of gravity

- protection of weaker party

- ordre public

- internationally mandatory rules of national law

Third Countries

RenvoiOrdre publicChoice of law

EU

It differs„Unified“ in EU (for contractualobligations)

Predictable Not predictable

-30-

C. I. 2 EU: for contractual obligations the principle of relevant contact(center of gravity) prevails

EU: Principles (1) – Relevant Contact

Relevant Contactof agreement to national law

� Characteristic performance (Art. 4 EVÜ, 28 EGBGB, Art. 4 Rome I)

� Even for definable parts of the agreement

� Material law applicable – no „renvoi“ (Art. 15 EVÜ, 35 EGBGB, Art. 20 Rome I)

� Assumption (Art. 4 II EVÜ,

28 II EGBGB)

- characteristic performance

� Unless: more closely connected to other country(Art. 4 V EVÜ, 28 V EGBGB)

� Not: - non-contractual obligations (Art. 1 EVÜ,38 ff. EGBGB, Art. 1 Rome I)

- title on real estate (Art. 4 III EVÜ, 28 III EGBGB and lex sedes materiae)

- property law (Art. 43 EGBGB und lex rei sitae)

� Beneficial comparision: - Consumer (Art. 5 EVÜ, 29 EGBGB, Art. 6 Rome I)- Employee (Art. 6 EVÜ,

30 EGBGB, Art. 8 Rome I)

� International mandatory law (Art. 34 EGBGB, 7 II EVÜ f. „law of forum“– 7 I EVÜ f. „law of third

country“, Art. 9 Rome I)

� Ordre Public

(Art. 6 EGBGB, Art. 21 Rome I)

Backup

-31-

EU: Principles (2) – Characteristic Performance

C. I. 2 EU: Characteristic Performance

Details

Sales

Work Supply

Services

Law of Seller

Law of Contractor

Law of Service Provider

as: � Distributor

� Agent (attend: Ingmar-Decision)

� Franchisee

� Others

May differ in distribution

-32-

Non-EU-Countries: Outline

C. I. 3 Third Countries: Principles are similar

Basics

Freedom of Choice

Specific Performance

Details

� Ordre public

� Mandatory rules

� International contract

� Grouping of contacts, most significant relationship

� Place of contract

Difficult to predict

Detailed review to recommend

-33-

C. II. Choice of Law

-34-

C. II. Choice of law clauses

Basic Questions

1. Subject of choice of law?

2. Law to be chosen?

3. How to choose?

-35-

C. II. 1 Subject of Choice of Law

-36-

C. II. 1 EU: Freedom of choice is predominant for contractualobligations

Principles (1) – Freedom of choice

Freedom of choiceArt. 3 EVÜ, 27 EGBGB, Art. 3

Rome I

� Choice of material law (Art. 3 EVÜ, Art. 4 II EGBGB, Art. 3 Rome I)

- no renvoi (Art. 15 EVÜ, Art. 35 EGBGB,

Art. 20 Rome I)

� Even for „neutral law“ (Art. 2 EVÜ, Art. 2 Rome I) = law of third country

� Completely or partly (Art. 27 I3 EGBGB, 3 I3EVÜ, Art. 3 Rome I); Dépeçage

� Escape from inconvenient law !?

But:

� Consumer protection (Art. 5

EVÜ, 29 EGBGB, Art. 6 Rome I)

� Employees (Art. 6 EVÜ, 30 EGBGB, Art. 8 Rome I)

Beneficial comparision

But:

� International mandatory law(Art. 34 EGBGB, 7 II EVÜ –7 I EVÜ, 22 EVÜ, Art. 9 Rome I)

E.g.: Belgian Distributor� Ordre Public (Art. 6 EGBGB, Art. 21 Rome I)

-37-

C. II. 1 Conclusion

Summary

Manufacturer,Seller





SellerDistributor,Purchaser

Contractual obligation Not: Non-contractual obligationNot: Property lawNot: Competition law

Choice of law possible?

-38-

C. II. 2 Law to be chosen?

-39-

Details (1) – Freedom of choice

C. II. 2 The choice of „neutral“ law is not free of doubts – at least outside the EU

� EVÜ/EGBGB: possible within the borders of 3 III EVÜ, 27 III EGBGB (pure national contracts and except of mandatory rules)

� Rome I: as above, even for pure national contracts (Art. 2 Rome I)

� Non-EU:

- depends on national law

„Neutral“ Law (law of third country)

-40-

Details (2) – Freedom of choice

C. II. 2 The choice of Soft Law is doubtful

UNIDROIT Principles, Lando Principles (PECL), lex mercatoria, Sharia etc.

� EU

- no exhaustive application of Soft Law – national law still applicable

� Non-EU

- ?

Soft Law (no national law)

It is to differentiate:

� Selection of the law for the whole contract („kollisionsrechtliche Verweisung“)

� Incorporation of some of the provisions of the choosen law („materiellrechtliche Verweisung“)

It is to differentiate:

� Selection of the law for the whole contract („kollisionsrechtliche Verweisung“)

� Incorporation of some of the provisions of the choosen law („materiellrechtliche Verweisung“)

-41-

C. II. 2. „Soft Law“ – mostly will only be applicable if agreed or ratified

Details (3) – Soft Law - What is it?

Partly ratified

� „Material Law“

If agreed (?)

If agreed (!)

If agreed (?)

If agreed (?)

UNCITRAL

UNIDROIT

ICC

Lando - PECL

CENTRAL - Lex mercatoria

CISG, New York Convention

UNIDROIT Principles

Incoterms, ICC Rules of Arbitration

Principles of European Contract Law

Common or Customary Law

„Organisations“ Content Application

-42-

C. II. 2. „Soft Law“ contains basics of contractual law

Details (4) – Soft Law - What does it contain?

UNIDROIT Principles Lando (PECL) lex mercatoria

� Application of Principles

� Conclusion of contracts

� Binding character

� Interpretation

� Third party rights

� Performance

� Non-performance and compensation

� Set-off

� Assignment, Transfer

� Limitation periods

� General Principles - Good faith and fair dealing,

venire contra factum proprium, pacta sunt servanda, etc.

- Freedom of contract - Cooperation - Set-off, retention

� Warranty, Liability - Culpa in contrahendo- Foreseeable loss - Lost profits

� Limitation � Burden of proof � Private International law

- Center of gravity test

� Application of Principles, General Principles

� Conclusion of contract

� Validity, interpretation

� Content

� Performance

� Non-performance remedies

� Assignment

� Set-off

� Limitation

� Conditions

� Interest

?

-43-


C.II. Again: What that law is applicable

-44-

C. II. 3 How to choose?

-45-

Details (1) – Form of choice

C. II. 3 Choice of law should be expressed and certain

Form

� EU (Art. 3 I EVÜ, 27 I EGBGB, Art. 3 Rome I)

- The choice must be expressed or demonstrated with reasonable certainty by the terms of the contract or

the circumstances of the case

� EU (Art. 3 IV EVÜ, 27 III EGBGB, Art. 3 Rome I)

- Choice shall be determined by the law which shall be chosen

� Third countries

- Depends on national law difficult to predict

-46-

Details (2) – Form of choice

C. II. 3 Problems: Choice of law in General Terms and Conditions

Choice of law in T&C

� Inclusion

- depends on national law

- Ideally: written form and enclosure of T&C

� Conflicting choice of law in T&C

- Last shot doctrine

- Knock-out-rule

- Center of gravity

� Language

- Allocation of risk: party who wants to include the T&C

- Ideally: „Global Language“ or language of contractual partner

- Special issue: reference on German letterhead

Ideally: written form and enclosure of T&C in the language of contractual partner; see

Federal High Court 31 October 2001 (WM 2002, 442) – CISG, but arguments are convincing

Ideally: written form and enclosure of T&C in the language of contractual partner; see

Federal High Court 31 October 2001 (WM 2002, 442) – CISG, but arguments are convincing

-47-

C. III. Competent Court, Choice of Venue, Enforcement

-48-

Questions

Manufacturer, Seller





SellerDistributor, Purchaser

� What to enforce and where?

C. III. Being smart: Stipulations for Conflicts

� What to be chosen?

� A combination of arbitration and ordinary courts?

� How to choose?

� What is reasonable?

� Who is deciding without a choice of venue?

-49-

C. III. 1. Enforcement

-50-

Outline – Recognition and Enforcement

C. III. 1. Difference between intra EU relationships and relationshipswith third countries

EU + EEA Non EU + EEA (third countries)

� ZPO (§§ 328, 722 ff.)

- Recogniton

- Procedures

� National law

- Judgement may not be enforced everywhere

- Better: Arbitration? (Due to New York Convention

of 1958)

� Brussels Regulations

� Lugano Convention

(Iceland, Norway, Switzerland)

- Prevail all national laws

- Enforcement in EU + EEA harmonized & possible (at least in theory)

in EU/EEA in Germany

in third countries

-51-

C. III. 2. Competence

-52-

� ZPO (§§ 12 ff.)

- Prevail all national law

- Competent court of seat of defendantand eventually at place of performance

- only in special cases at place of claimant

� National rules on competence

� ???

- Double competence conceivable

- Only in special cases at place of claimant

� Brussels Regulations

� Lugano Convention

(Iceland, Norway, Switzerland)

- Prevail all national laws

- Competent court at seat of defendant and eventuallyat place of performance

- Only in special cases at place of claimant

Outline – Competence of courts

C. III. 2. Difference between intra EU relationships and relationshipswith third countries

EU + EEA Non EU + EEA (third countries)

in EUGermany

third countries

-53-

C. IV. Choice of Venue

-54-

C. IV. Difference between intra EU relationships and relationships with third countries

Outline – Choice of venue

National (Germany) EU + EEA Third Countries

� § 38 I ZPO

- Only merchants

- No form, explicit or implicit

� § 38 II ZPO

- No general domestic court in Germany

- Written or in writing and

confirmed

But:

� Art. 23 Brussels Regulation- Not: consumer, employees- Written or in writing and

confirmed- In trade usances

� § 38 II ZPO

- No general domestic court in Germany

- Written or in writing and

confirmed

� Respective national law

-55-

C. V. Arbitration Clauses

-56-

Criteria

C. V. Arbitration

� Due to New York Convention of 1958 (140 Member States) better to enforce

� Selection of Arbitrators

� International: Not focusing national law/circumstances

� Free to find applicable law

� Free to find appropriate procedures – but might be dangerous

� No publicity

� Speed?

� Costs?

-57-

0,00

50.000,00

100.000,00

150.000,00

200.000,00

250.000,00

300.000,00

350.000,00

400.000,00

450.000,00

500.000,00

DIS Kostenrisiko 3 SR (mit RVG Anwälte) 17.615,00 22.955,00 61.565,00 97.165,00 254.165,00

ICC Kostenrisiko Mittel 3 SR (mit RVG Anwälte) 23.027,72 33.668,82 83.973,64 125.414,50 289.402,40

Gericht Kostenrisiko 1. Instanz 6.598,00 9.338,00 23.848,00 35.848,00 131.848,00

Gericht Kostenrisiko 1. und 2. Instanz 14.279,60 20.344,40 52.449,60 78.849,60 290.049,60

Gericht Kostenrisiko 1., 2. und 3. Instanz 24.509,20 34.914,80 89.999,20 135.299,20 497.699,20

50.000 100.000 500.000 1 Mio 5 Mio

Details

Comparision in costs* - ordinary courts/arbitration

Streitwert

Verfahrenskosten

* net without in expenses in Germany

C. V. Arbitration

-58-

0,00

500.000,00

1.000.000,00

1.500.000,00

2.000.000,00

2.500.000,00

3.000.000,00

DIS Kostenrisiko 3 SR (mit RVG Anwälte) 17.615,00 22.955,00 61.565,00 97.165,00 254.165,00 378.665,00 561.665,00 810.665,00 909.665,00

ICC Kostenrisiko Mittel 3 SR (mit RVG Anwälte) 23.027,72 33.668,82 83.973,64 125.414,50 289.402,40 412.209,65 605.673,50 874.171,95 970.914,70

Gericht Kostenrisiko 1. Instanz 6.598,00 9.338,00 23.848,00 35.848,00 131.848,00 251.848,00 491.848,00 731.848,00 731.848,00

Gericht Kostenrisiko 1. und 2. Instanz 14.279,60 20.344,40 52.449,60 78.849,60 290.049,60 554.049,60 1.082.049,60 1.610.049,60 1.610.049,60

Gericht Kostenrisiko 1., 2. und 3. Instanz 24.509,20 34.914,80 89.999,20 135.299,20 497.699,20 950.699,20 1.856.699,20 2.762.699,20 2.762.699,20

50.000 100.000 500.000 1 Mio 5 Mio 10 Mio 20 Mio 50 Mio 100 MioStreitwert

Verfahrenskosten

30 Mio. Cap in RVG and GKG

Details

Comparision in costs* - ordinary courts/arbitration

* net without in expenses in Germany

C. V. Arbitration

-59-

D. Distribution

-60-

D. I. Effective entry and penetration of markets require activity and knowledge

Situation of Principal (Manufacturer)

Market entry

Estabilishment of customer relations

Analysis of the market

Reasonable activity

Flexible structure

Tax considerations

1

2

3

4

5

6

Status quo Objective

No presence on market

No customer relations

No knowledge about markets

No huge investments

No fix structures

No tax implications

Presence on market

Customer relations

Growing knowledge

Efficient structure

Flexibility

No tax implications

-61-

D. II. Analysis of potential structures and systems

Outline

� Mostly companies

� Purchase and sale

� In own name on own account

� Risk of sales with D

� Double margins

Distributor (D)

� Persons and companies

� Constant promotion

� Solicitation with authority

� Risk of sales with principal

� Success related remuneration

Agent (A)

� Persons

� Protection of employee

Employee (E)

Cleardistinction

Cleardistinction

MixturesMixtures

Franchisee Commissioner Freelancer

� Only on occasion� Own name on account of principal

� Concept, CI, CD, Royalties

Branch

� Tax implications

-62-

D. II.1. Distributorships – legal character

OutlineBackup

• not clearly stipulated in statutory law

• antitrust law applicable => typical limitation (such as exclusivity, non-competition, etc. require legal review)

• no compensation – if properly drafted

-63-

D. II.2. Agencies – legal character

OutlineBackup

• clearly stipulated in statutory law – all over Europe and maybe beyond

• strong protection of distributor: number of advantageous internationally mandatory provisions for agent

• no antitrust law applicable – if properly drafted

-64-

Base YearNew

regulars Year 1 Year 2 Year 3 Year 4 Year 5

Base Year Forecasting Horizon CapEquitableness• approx.: 5 years (example)• churn rate: 20 % (example)

• normally last yearbefore effectivetermination

• only new customerswho became regularcustomers

• term• etc.

Average annual

provisionwithin last 5 years

Sum1 to 5

EquitableAmount

Compen-sation

expiry of contractual term or mutual understanding without waiver or termination by principal without good cause given by agent or termination by agent with good cause given by principal

Compensation claims require Termination of Agreement by

Burden of proof: Agent Burden of proof: Principal

D. II. Calculation of Compensation Claims (Sec 89b German Commercial Code, HGB)

Compensation Claim § 89 b HGB (Germany) – Abstract

Backup

-65-

D. II. Calculation of Compensation Claims (Sec 89b German Commercial Code, HGB) – mutatis mutandis for distributors!

German JurisdictionBackup

Compensation claims in mutatis mudandis application on distributors

According to German jurisdiction the precondition for such mutatis mutandis application under German law is (cumulative):

� the integration of the distributor into the sales organisation of the company

and

� any obligation (in the agreement or factual) of the distributor to forward customer data (names, addresses, etc.) during the term of the agreement or in the course of its termination to the company.

In such cases German jurisdiction applies the rules for goodwill compensation of agencies (Sec. 89 b German Commercial Code) and some other agency provisions (e.g. pertaining to the waiver on compensation in settlements and termination notice etc.) to distributors mutatis mutandis.

-66-

D. II. It cuts both ways …

Structures and systems – advantages and disadvantages for principal

� Risk of sale with D

� No goodwill compensation (if properly drafted)

� Investments by D

� Availability of goods

Distributor (D)

� No antitrust law (if properly drafted)


� Knowledge about market

Agent (A)

� Strong directives possible

Employee (E)

FeaturesFeatures� Antitrust law, limited directives

� Double margins

� Limited forwarding of market knowledge

� Risk of sale with principal

� Goodwill compensation mandatory

� Costs

� Costs

� Employee protection

-67-

D. II. Chances and risks must be balanced

Outline of chances and risks

� Allocations of risks

� No goodwill compensation

� Antitrust rules on restrictions

� Potential goodwill compensation

Risks

Chances

� Strong directives and exhaustive reports on market


� Employment law (?)

� Interests protection

� Goodwill compensation mandatory

Risks

Chances

Distributor (D) Agent (A)

-68-

D. II. Advise necessary

Distributor or Agent

Chances

Risks

Commission as ”best of both worlds“ – concept?

-69-

F. Antitrust Law – on Vertical Agreements

-70-

Article 81 – Treaty of Rome (similar in German law – GWB)

1. The following shall be prohibited as incompatible with the common market: all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the common market, and in particular those which: (a) directly or indirectly fix purchase or selling prices or any other trading conditions;(b) limit or control production, markets, technical development, or investment; (c) share markets or sources of supply;(d) apply dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage; (e) make the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.

2. Any agreements or decisions prohibited pursuant to this article be automatically void.

3. The provisions of paragraph 1 may, however, be declared inapplicable in the case of: - any agreement or category of agreements between undertakings,- any decision or category of decisions by associations of undertakings, - any concerted practice or category of concerted practices, which contributes to improving the production or distribution of goods or to promoting technical or economic progress, while allowing consumers a fair share of the resulting benefit, and which does not: (a) impose on the undertakings concerned restrictions which are not indispensable to the attainment of these objectives;(b) afford such undertakings the possibility of eliminating competition in respect of a substantial part of the products in question.

-71-

F. I. Antritrust law – in Germany, Europe and third countries

Outline

National (GWB) EU + EWR Third countries

� GWB

- § 1 GWB „Prohibition“

- § 2 GWB „Exemptions“ leads

to EU Block exemptions

� Respective national law� Art. 81 ff. EGV

� Block exemptions

- Vertical Agreements

- Technology Transfer

- R&D

- Specialisation

- Vehicle Distribution

- etc.

+ Guidelines

� De-minimis Notices

=> market share

(5% / 10% / 15% / 30%) – applied in Germany as well

-72-

F. II. Systematic review is required

System (for vertical agreements)

Restraint?1

Beyond de minimis?3

Exemption?4

Vertical or horizontal?2

Definition of relevant market very important

� hardcorerestrictions, already

for de minimis test of importance

� > 30 % Marketshare of Supplier

� Other preconditions on Block Exemption for verticalagreements

� De-minimis-Note, Marketshare

- < 10 % for Competitors

- < 15 % for Non Competitors

- < 5 % in cumulative Systems

� if no free to decide aboutactivity

� between (at least potential) Competitors

horizontal

� different level of production ordistribution (Not-Competitors)

vertical

-73-

F. III. Typical Restraints

Outline

� Price Fixation => hardcore restriction!

� Restriction in Territory => depends on active/passive trade and market share

� Exclusivity => depends on restriction for buyer or seller and marketshare etc.

� Non compete obligations => depends on marketshare and term

� etc.

-74-

Thanks for your attention!

BerlinEbertstraße 15D-10117 BerlinTel. +49 (0)30 885636-0Fax +49 (0)30 [email protected]

BrusselsTrône House4 Rue de TrôneB-1000 BrusselsTel. +32 (0)2 2896060Fax +32 (0)2 [email protected]

Dubai28th Floor, Al Moosa Tower IISheikh Zayed RoadP.O. Box 33675 DubaiTel. +971 (4) 3 32 33 24Fax +971 (4) 3 32 33 [email protected]

DüsseldorfBenrather Straße 15D-40213 DüsseldorfTel. +49 (0)2118387-0Fax +49 (0)[email protected]

NeussAm Krausenbaum 42D-41464 NeussTel. +49 (0)2131 74030-0Fax +49 (0)2131 [email protected]

Frankfurt a. M.Senckenberganlage 20-22D-60325 Frankfurt a.M.Tel. +49 (0)69 97130-0Fax +49 (0)69 [email protected]

HamburgHTC – Am Sandtorkai 41D-20457 HamburgTel. +49 (0)40 36803-0Fax +49 (0)40 [email protected]

LondonNo. 5 New Square StreetLondon EC4A 3 TWUnited KingdomTel. +44 (0)20 7300 7000Fax +44 (0)20 7300 [email protected]

MunichIsartorplatz 8D-80331 MünchenTel. +49 (0)89 21038-0Fax +49 (0)89 [email protected]

Paris42, Avenue MontaigneF-75008 ParisTel. +33 (0)172 740333Fax +33 (0)172 [email protected]

AlicantePaseo Explanada de Espana No. 1E – 03002 Alicante, SpanienTel. +34 (0)96 5142805Fax +34 (0)96 [email protected]

BeijingUnit 1503, Tower 2, Prosper CenterNo. 5, Guanghua Road,Chaoyang DistrictBeijing 100020People‘s Republic of ChinaTel. +86 (10) 85 87 58 86Fax +86 (10) 85 87 58 [email protected]

Shanghai15th Floor United Plaza, Unit 1509No. 1468, Nanjing West Road200040 Shanghai Tel. +86 (0)21 62477247Fax +86 (0)21 [email protected]

WarszawaBSJP – Focus Office Building Al. Armii Ludowej 26PL-00-609 Warszawa, Poland Tel. +48 (22) 579 89 00Fax +48 (22) 579 89 [email protected]

Mbs Commercial Law June And July 2009

Documents

Transcript of Mbs Commercial Law June And July 2009