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Winter 2011-2012 | |
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SITE NEWS |
This page contains a bilingual glossary of terms used in International Distribution Law:  (supply) quota system“Several documents seized by the Commission prove that a strategy of imposing quotas was implemented in order to restrict all re-exports from Italy... It states: although the delivery periods for the [vehicles] could be significantly reduced by up to eight months, quotas are still applied to the dealers. [CFI, 6 July 2000, Aff. no T-62/98, Volkswagen v. Commission, pts. 79-80]” Note: This business practice limits supply to a distributor in order to control their stocks and to thus reduce their ability to export the product under quota. This strategy implemented between privately-owned undertakings must be distinguished from quotes imposed by state authorities in order to manage the international trade in those local goods and services that they wish to protect (e.g., road transport services, produce from fishing). en français | COMMENTS: (0) | LINK | updated: 2011-02-20 TAGS: parallel trade . refusal to deal . competition law . active sale / passive sale “"Active" sales mean actively approaching... a specific customer group or customers in a specific territory through advertisement in media, on the internet or other promotions specifically targeted at that customer group or targeted at customers in that territory... "Passive" sales mean responding to unsolicited requests from individual customers... General advertising or promotion that reaches customers in other distributors' (exclusive) territories or customer groups but which is a reasonable way to reach customers outside those territories or customer groups... are considered passive selling... (Commission notice: "Guidelines on Vertical Restraints", 2010/C 130/01, pt. 51)” Note: These terms do not uniquely concern international distribution (e.g., when the reserved territories are within one country), but are systematically mentioned when a distribution network traverses national borders (of EU countries especially). Note that sales whose conclusion is facilitated by a website may be characterized as active or passive depending on the technical circumstances of the offer (cf. ibid., pts. 52 et seq.). en français | COMMENTS: (0) | LINK | updated: 2011-08-26 TAGS: exclusive territory . active sale . passive sale . sale by website . bait and switch selling // bait advertising “Bait and switch selling (2) A person engages in reviewable conduct who advertises at a bargain price a product that the person does not supply in reasonable quantities having regard to the nature of the market in which the person carries on business, the nature and size of the person’s business and the nature of the advertisement. (Competition Act, Canada, Art. 74.04)” Note: practice in which the seller publicizes the very attractive price of a product or group of products, often branded (with a trademark), 'baiting' customers into the store; once there, the seller can 'switch' their attention to other, more expensive, goods; / continued in the comments page... / en français | COMMENTS: (1) | LINK | updated: 2009-03-09 TAGS: bait-and-switch . commercial agent “For the purposes of this Directive, 'commercial agent' shall mean a self-employed intermediary who has continuing authority to negotiate the sale or the purchase of goods on behalf of another person, hereinafter called the 'principal', or to negotiate and conclude such transactions on behalf of and in the name of that principal. (EU Directive 86/653 , Art. 1)” Note: in the context of distribution, the juristic acts performed via the agent relate to sales or service contracts, and in this way the agent multiplies these contracts (which will be entered into by the principal and his clients, who are not party to the distribution contract); distribution also implies that the agent's mission is not limited to the performance of a single juristic act en français | COMMENTS: (0) | LINK | updated: 2009-03-04 TAGS: commercial agent . agent . agency . Directive 86/653 . intermediary . representation . (contractual) negotiations . principal . commercial framework contract “(no official example available at this time)” Note: type of distribution contract establishing a framework for multiple future sales or service contracts ('implementation contracts') in which the parties to the distribution (framework) contract are the same as those in the implementation contracts; not to be confused with public 'framework contracts/agreements' which are a procurement method for government customers (usually public sector organizations or other countries)... en français | COMMENTS: (0) | LINK | updated: 2009-03-09 TAGS: implementation contract . international sale . international commerce . international distribution . commission-affiliation agreement “(no official example available at this time)” Note: This type of contract doesn't seem to be very popular with Anglo-Saxon franchisors. In France, it mixes elements drawn from a commission agent's contract with those from know-how and/or trademark licensing. It is thus similar to a franchise except insofar as the ownership of the stock is concerned (the affiliate does not own the stock that it distributes). When referring to this agreement in English, it should not be confused with the more general 'affiliate', 'an entity controlled by, controlling, or under common control with, another entity' (e.g. 16 CFR 436.1). en français | COMMENTS: (0) | LINK | updated: 2009-03-04 TAGS: commission . commission agent . intermediary . representation . affiliation . affiliate . franchise . stock . property title . exclusive distribution “In an exclusive distribution agreement, the supplier agrees to sell its products to only one distributor for resale in a particular territory. At the same time, the distributor is usually limited in its active selling into other (exclusively allocated) territories. (European Commission, 'Guidelines on Vertical Restraints'-II, pt. 151)” Note: Sometimes this is referred to as an 'exclusive (sales) concession' (cf. C-14/76), though this should not be confused with a 'concession', which, in the context of distribution, refers to a small business operating on the premises of a larger business (e.g. a 'concession stand'). This term should also not be confused with a 'concession' of government grants or licenses. en français | COMMENTS: (0) | LINK | updated: 2011-08-24 TAGS: exclusive distribution . exclusivity . exclusive sales concession . exclusive concession . concession . exhaustion of rights (conferred by a trademark) “[I]n adopting Article 7 of the Directive, which limits exhaustion of the right conferred by the trade mark to cases where the goods bearing the mark have been put on the market in the Community... the Community legislature has made it clear that putting such goods on the market outside that territory does not exhaust the proprietor's right to oppose the importation of those goods without his consent and thereby to control the initial marketing in the Community... of goods bearing the mark. [CJCE, 1 July 1999, C-173/98, pt. 21]” Note: Grosso modo, from the moment that a manufacturer sells (directly or through its distributor authorized to do so) the product protected by its trademark within the EU, it can not prohibit, on the basis of this industrial property right, its resale in the EU (cf. Article 7 of Council Directive 89/104, 21 December 1988). en français | COMMENTS: (0) | LINK | updated: 2009-09-13 TAGS: intellectual property . trademark infringement . franchise “In a system of distribution franchises of that kind an undertaking which has established itself as a distributor on a given market and thus developed certain business methods grants independent traders, for a fee, the right to establish themselves in other markets using its business name and the business methods which have made it successful. Rather than a ['classical'] method of distribution [i.e., purchase for resale], it is a way for an undertaking to derive financial benefit from its expertise without investing its own capital... Franchise agreements for the distribution of goods differ in that regard from dealerships or contracts which incorporate approved retailers into a selective distribution system, which do not involve the use of a single business name, the application of uniform business methods or the payment of royalties in return for the benefits granted. (CJCE Aff. n. 161/84, pt. 15)” Note: Licensing of a very particular type of intellectual property (commercial know-how that was tested and has proven to be successful); distribution contract because it organises the multiplication of sales or service contracts between the franchisee and its clients; The particular nature of the intellectual property at the center of this contract often obligates the franchisor to adapt it, to ensure its full and adequate communication (disclosure documents, 'bible', training...), to assist in its implementation, etc. The term should not be confused with 'franchises' of government grants or licenses (in which context it could be synonymous with 'concession'). en français | COMMENTS: (0) | LINK | updated: 2009-03-04 TAGS: franchise . franchising . implementation contracts “(no official example available at this time)” Note: (pl.) multiple sales or service contracts entered into by parties who have previously concluded a commercial framework contract which organizes and/or obligates the conclusion of these implementation contracts; This term should not to be confused with technology or environment-related 'implementation contracts'. en français | COMMENTS: (0) | LINK | updated: 2009-03-09 TAGS: framework contract . international sale . international commerce . international distribution . master franchise “an agreement whereby one undertaking, the franchisor, grants the other, the master franchisee, in exchange of direct or indirect financial consideration, the right to exploit a franchise for the purposes of concluding franchise agreements with third parties, the franchisees;' [Regulation n. 4087/88 of 30 November 1988 'on the application of Article 85 (3) of the Treaty to categories of franchise agreements', art. 1-3(c); N.B.: expired]” Note: Whereas a standard franchise corresponds to the licensing of a very particular type of intellectual property (cf. the definition on our website), a 'master franchise' obligates a party to 'get the IP licensed' by foreign franchisees. The franchisor, who created and tested the franchised concept, might not be familiar enough with the business or legal environment in another country to know the best way to develop that concept in the new territory. The franchisor would thus try to find a local 'expert' that would be able to make the necessary adaptations so that the concept can be successfully franchised in the target territory. This relationship between the franchisor and the master franchisee can correspond, for example, to an agency, brokerage, or service contract, depending on how the master franchisee is supposed to develop the network and on the type of contracts that the master franchisee will propose to the local franchisees. Nothing prevents a franchisor from developing their concept internationally by themselves and entering into international franchise contracts directly with foreign franchisees. This can also happen through the brokerage of a master franchisee who connects the franchisor to local franchisees. Note that there are important differences between a 'master franchise' relationship and a (direct) international franchise contract, for example, from the point of view of private international law, competition law, consumer law, taxation, tortious or contractual responsibility, etc. en français | COMMENTS: (0) | LINK | updated: 2009-11-26 TAGS: master franchise . franchise contract . international franchise . parallel trade “[T]he concept of parallel trade... involves a dealer buying goods in one Member State with a view to reselling them in another where prices are higher... [paraphrase, by the applicant, of the Commission's 'First Report on Competition Policy', 1971; TPI, 7 July 1994, T-43/92, pt. 113]” Note: The distributor (especially of luxury goods) profits from the price differential, sometimes at the expense of the manufacturer's international pricing policy and the product's 'image'. Because the practice contributes towards the harmonization of prices within the EU, and since consumers also benefit, the Community institutions sanction manufacturers who try to block this trade (e.g., clauses prohibiting any resale outside the granted exclusive territory). However, the distributor must still acquire the relevant goods from legitimate sources (e.g., not contravening a clause forbidding resale outside the network). The situation is more complicated when the practice extends beyond EU borders... Depending on the context, sometimes the terms 'parallel market', 'parallel imports' or 'grey market' are used. en français | COMMENTS: (0) | LINK | updated: 2009-09-13 TAGS: luxury goods . competition law . import-export . resale outside network . exclusive concession . selective distribution “means a distribution system where the supplier undertakes to sell the contract goods or services, either directly or indirectly, only to distributors selected on the basis of specified criteria and where these distributors undertake not to sell such goods or services to unauthorised distributors; (Regulation n. 2790/1999) Selective distribution agreements, like exclusive distribution agreements, restrict the number of authorised distributors on the one hand and the possibilities of resale on the other. The difference with exclusive distribution is that the restriction of the number of dealers does not depend on the number of territories but on selection criteria linked in the first place to the nature of the product. Another difference with exclusive distribution is that the restriction on resale is not a restriction on active selling to a territory but a restriction on any sales to non-authorised distributors, leaving only appointed dealers and final customers as possible buyers. Selective distribution is almost always used to distribute branded final products. (European Commission, 'Guidelines on Vertical Restraints'-II, pt. 174)” Note: it is possible (in some cases) to combine exclusive and selective distribution schemes... en français | COMMENTS: (0) | LINK | updated: 2011-08-24 TAGS: selective distribution . |
