Tailoring distribution agreements with specific attention to competition aspects of distribution activity

WTS Consulting supports the optimization of the distribution structure, provides preparation of agency and distribution agreements and other agreements in the area of distribution in accordance with requirements of the antitrust legislation of Ukraine.

We assist to avoid violations in the form of concerted activities (cartel agreements) prohibited by the legislation on protection of economic competition (risk of such violations arise when contract contains requirements of usage of goods supplied by this contract, formulation of conditions on reselling of goods, as well as linking commodities to conditions of non-competitiveness).

For regulation of distribution relations it is admissible to conclude an agreement on the use of the intellectual property object within the established limitations of the licensee rights (particularly, regarding the scope of transferred rights, term and territory where the permission on use of the intellectual property is valid, the area of use of the intellectual property object, the minimum amount of production, etc.).

Our practice concerning the protection of clients’ rights in the area of distribution creates precedents. In particular, we have proved at the Supreme Administrative Court for the first time that the transfer of ownership on commodities supplied from manufacturer to distributor does not affect the connection between the services of promotion of commodities and commercial activity of the manufacturer. As a consequence, the cost of such services should be included to manufacturer’s gross costs for income tax purposes.