Introduction

Compared to collusion or abuse of dominance, a distribution agreement, where neither manufacturer nor distributor holds a dominant position, seems to be conduct that should not worry competition authorities. While a cartel is an alliance where parties' shared aim is damage to the competitive process by reducing output and increasing price, a distribution agreement (in the jargon, a ‘vertical restraint’) is an alliance where the parties' shared aim is to increase output and reduce price to the benefit of consumers. This abstract point can be illustrated by the ECJ's observations in Delimitis v. Henninger. The dispute concerned a contract between a brewery and a publican: in exchange for the brewer offering the publican a lease of a pub on favourable terms as well as equipment and furniture necessary to operate the pub, the publican undertook to buy a certain quantity of beer exclusively from the brewery. The Court recognised that this agreement did not have as its object the restriction of competition because of the benefits to brewer, publican and consumer: the contract guaranteed that the brewer had certain outlets that would sell its beer, allowing it to plan sales and to organise production and distribution effectively; the publican gained access to the beer distribution market under favourable conditions and with the guarantee of beer supplies, and their ‘shared interest in promoting sales of the contract goods likewise secures for the reseller the benefit of the supplier's assistance in guaranteeing product quality and customer service’.