Authorised dealer contracts

We would like to highlight one court decision on the law governing authorised dealers, namely a decision by Dusseldorf Higher Regional Court that we consider to be highly relevant in practice. In its decision of 28 August 2024 (VI-Kart 4/22 (V)), the court dealt extensively with the conditions to be met for the lawfulness of contractual restrictions of competition in the vertical relationship. With regard to exclusive purchasing agreements and corresponding non-compete clauses, the Higher Regional Court initially confirmed the criteria already established by case law. However, there is also further practical guidance, particularly for companies with market shares above 30%.

Assessment of non-compete agreements in vertical relationships in the case of market shares above 30%

The subject in dispute was a decision by Germany’s Federal Cartel Office (Bundeskartellamt) in 2022 in which an exclusive purchase obligation agreed between a chainsaw manufacturer and its dealers was deemed to be in breach of antitrust law. The manufacturer successfully objected to this: The Higher Regional Court set aside the Federal Cartel Office’s decision as substantively unlawful. In the grounds for its decision, the Higher Regional Court found that agreeing on a non-compete clause is not inadmissible and therefore invalid simply because the supplier or the customer has exceeded the market share threshold of 30% set out in the Vertical Block Exemption Regulation. In the court’s opinion, in this case the specific market circumstances were relevant, particularly any market-foreclosing effects of the non-compete agreement in the market; the Federal Cartel Office had not analysed this adequately, the court said. The court then considers in detail many criteria which play a role in assessing the validity of a non-compete clause if the market share threshold of 30% is exceeded. This way the court gives practitioners useful guidance. Furthermore, the guiding principle that can be derived from the grounds for the decision is that a non-compete clause exceeding two years is generally only capable of significantly influencing market access if the manufacturer or supplier has a market share of over 40% and the level of commitment, in terms of both market share and sales outlets, is above 30%. For further details see our detailed online analysis of the decision.

Practical recommendations

The decision of Dusseldorf Higher Regional Court makes it clear that non-compete clauses are not to be classified as anti-competitive per se in companies with market shares of more than 30% and are therefore generally possible when drafting contracts. However, it is clear that each case must be considered on its own merits, so the validity of non-compete clauses – especially outside the scope of the exemption provided by the Vertical Block Exemption Regulation – cannot be assessed in a generalised way. In practice, it is advisable that when agreeing on exclusive purchasing clauses and corresponding non-compete clauses in the contractual relationship between a manufacturer and a dealer, particular care should be taken to check whether and to what extent these are permissible in the individual case; the actual market conditions are decisive in this respect.

This article is part of the "Update Commercial 2025". All insights and the entire report as a PDF can be found here.