ReguJaUons, 1996

t.N. 149 fIl I99fi

COMPJo..,.ITION ACT, 1994

(ACT NO. XXXI OF 1994)

Exclusive Oistrlbution Agreements (Block Exemptions)

ReguJaUons, 1996

IN exercise of the powers conferred by subsection ( I) of section

8 of the Competition Act, 1994, the Minister for Economic Services,

after consultation with the Commission for Fair Trading, has made

the following regulations:-

I. These regulations may be cited as the Exclus ive Distribu-

tion Agreements (Block Exemptions) Regulations, 1996.

These regulations shall come into force on the 1st August,

1996 and shall tenninate on the 3 1 st October, 1999 .

These regulations specify the block exemption subject to such

conditions and limitations and as applicable to categories of Exclu-

sive Distribution Agreements, decisions and practices in tenns of sub-

section (I) of section 5 of the Act.

In these regulations. unless the context otherwise requires -

"Act"" means the Competition Act. 1994 which regulates

competition and provides for Fair Trading in Malta;

'"the Commission" means the Commission for Fair Trading

as provided for under the Competition Act. 1994;

'"the contract territory" means the tenitory which is con-

templated in the contract between the supplier and the distribu-

tor;

'"the contract goods'" means the goods identified in the con-

tract between the supplier and the distributor;

"connected undertakings" means the undenakings over

which the supplier, party to the contract. would direclly or indi-

rectly have a controlling imerest

"Director" means the director of the office for Fair Compe-

tition.

S, Agreements 10 which only two unde rtakings are party and

whereby one party agrees with the other to supply certain goods for

resale within the whole or a defined area of Malta only to that other

party. shall be exempted from subsection (I) of section 5 of the Act,

provided that no further restriction on competition other than the fol-

lowing shall be imposed

(a) that the supplier shall be obliged not to supply the con-

tract goods to users in the contract territory;

(b) that the exclusive distribuuw shall be obliged not to

manufacture or distribute goods which compete with the contract

goo<b,

(c) that the exclusive distributor shall be obliged to obtain

the contract goods for resa le only from the other pany;

(d) that the exclusive distribUlor shall be obliged to refrai n,

outside the contract territory and in relation to the contract goods,

from seeking customers, establishing any branch, and main ta in-

ing any distribution depot.

6 . (1) The block exemption shall apply notwithstanding that the A~lMtof

exclusive distributor undettal:es all or any of the following obligations

Block EKmption.

<a) to purchase complete ranges of goods of similar nature

or minimum quantities;

(b) to sell the contBCt goods under trade marks, or packed

and presented as specified by the other party;

(c)

to make measures for promotion of sales, in panicular

(i)

to adve rtise ,

(ii)

to main tain a sales network ,

(iii)

to maintain a stock of goods ,

(iv)

to provide customer and guarantee services,

(v) to em ploy staff having specialised or technical

training,

(2) The block exemption shall also apply notwithstandi ng that

the exclusive distributor is obliged to rece ive the goods referred to in

the contract whlch are manufaclUred by an undertaking connected with

the supplier, pany to the same contract.

Nc..A~1iIy

The block exem ption shall not apply where

olBIoct~.

(a) both panics, including also parties connected within a

group of undertakings, being suppliers of identical goods or of

goods which are considered by usen as equivalent in view of !heir

c haf'.lClCristics, price and intended use , enter into reciprocal ex-

clusive distribution agreements between themselves in respect of

such goods;

(b) one or both parties make it difficult for intermediaries

or users to obtain the contract goods from other dealeB wi!hin

Malta or, in so far as no alternative source of supply is available

there , from outside Malta, on !he !emu there customary.

8, The Commission is hereby being granted the power to wi!h-

draw the benefit of this block exemption when it finds in a particular

case. on a request by the Director,!hat an agreement which is exempt-

ed by these regulations nevertheless does not contribute towards the

objective of improving production or distribution of goods or promot-

ing technical or economic progress and which does not allow consum-

eB a fair share of the resultant benefit, and in panicular where

(a) the contract goods are not subject. in a substantial pan

of Malta. to effective competition from identical goods or goods

considered by users as equivalent in view of their characteristics.

(b)

tne exclusive distributor.

(i) without any objectively justified reason refuses to

supply in the contract territory categories of purchasers who

cannot obtain contract goods elsewhere on suitable tenns or

applics to them differing prices or conditions of sale

sells the contract goods at excessively high prices

(ii)

(c ) access by other suppliers to !he different stages of dis-

tribution within the contract territory is made dirfic ult to a signif-

icant extent .

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