Delft Oranje bv ('Delft') is a company based in Delft (a city in the Netherlands). It is one of the world's major porcelain manufacturers, including in the manufacture of kilns for porcelain and pottery production. It operates in many countries, including in nine European Union Member States, where its market share of the market for porcelain and porcelain-related products, in those Member States, typically varies between 40% and 65% (the average across the nine EU states is 50%, but it only has less than 2% of the porcelain markets in Germany and France). These market shares have remained reasonably constant for the most recent ten years.

Delft wants to expand its market in France and is proposing to enter into a distribution agreement with Jouet s.a.r.l ('Jouet'), a French company. Delft and Jouet have agreed on the following terms in principle, but have not yet entered into a formal written agreement:

1. Delft will appoint Jouet as Delft's sole authorized distributor in France; Delft also agrees not to sell Delft's own products directly to customers in France.
2. In return, Jouet will not distribute Delft's products outside France; in particular, it must not export Delft's kilns from France, or actively seek customers for kilns from outside France.
3. Jouet will also resell the kilns at prices that Delft will set.

Advise all affected parties of the legal consequences under European Union law of Delft and Jouet entering into an agreement on these terms.

Answer rating: 100% (QA)

The proposed distribution agreement between Delft Oranje bv and Jouet sarl could have several implications under EU competition law particularly regar... View the full answer