Are distributor and supplier allowed to make price agreements?

In a distribution agreement, parties can lay down agreements on the price the distributor has to pay for the purchase of the supplier’s products and services. However, agreements regarding the resale price (the price the distributor charges for the products of the supplier) are not always permitted.

The supplier is allowed to impose on the distributor a maximum resale price or lay down a recommended price for resale. However, agreements on minimum prices or fixed resale prices are unlawful pricing agreements.

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Related questions

  • What’s the difference between distribution and agency?

    Distribution agreements and agency agreements are often confused. That’s logical, as there are many similarities. However, there are a number of significant differences between distribution and agency:

    • The agent acts in the name and for the account and risk of the supplier of the product or manufacturer (the principal), whereas the distributor is considered to be a self-employed entrepreneur who acts on behalf of himself and at his own account and risk.
    • Upon termination of the agency agreement, the agent is usually entitled to clientele compensation (goodwill indemnity). The distributor does not have this right.
    • The agency agreement is governed by law providing the agent with a certain protection, whereas the distribution agreement is not governed by law. As a result, parties to a distribution agreement are free to make the agreements they want to, and they specifically have to do so as otherwise nothing will be established.
    • The period of notice for a distribution agreement is usually much longer than the statutory notice period for an agency agreement.