Decree of the Office for the Protection of Competition No 204 / 2001 Coll.
Ordinance of the Office for the Protection of Competition for the Authorisation of a General Exemption from the Prohibition of Competition Agreements pursuant to § 3 (1) of Act No. 143 / 2001 Coll., on the Protection of Competition, for certain types of motor vehicle distribution and service agreements
Valid
Order
Effective from 01.07.2001
Text versions:
01.07.2001
20.06.2001
204
DECLARATION
The competition authority
of 5 June 2001
authorising a general exemption from the prohibition of agreements distorting competition pursuant to Article 3 (1) of Act No. 143 / 2001 Coll., on the Protection of Competition, for certain types of motor vehicle distribution and service agreements
According to Section 26 (1) of Act No. 143 / 2001 Coll., on the Protection of Competition, the Authority provides:
(1) The prohibition provided for in Article 3 (1) of Act No. 143 / 2001 Coll., on the Protection of Competition, hereinafter referred to as "the Act," does not apply to agreements on the distribution and service of motor vehicles concluded between two competitors which contain an obligation within the defined territory to supply only to the other party to the Agreement or to the other party to the Agreement and to the designated number of other competitors operating within the distribution system for resale of new motor vehicles intended for use on public roads with three or more wheels and spare parts of such vehicles under the conditions laid down in this Decree.
For the purposes of this Order
(a) a distribution and service agreement is a framework agreement between two competitors for a fixed or indefinite period, whereby one party to the agreement (supplier) entrusts the other party to the agreement (distributor) to sell the goods and provide the service for those goods; for the purposes of this Order, the decision of the association of competitors shall not be considered to be an agreement,
(b) spare parts are those which replace the original parts of the vehicle; the spare part is not accessories retrofitted to the vehicle which would not replace the original parts,
(c) the competitors operating in the distribution system are the parties to the agreement, the producers and other competitors entrusted by the manufacturer with the sale and service of the contract or the corresponding goods, or carry out such sale and service with its consent;
(d) the motor vehicle is a motor vehicle manufactured or assembled by the manufacturer and identical in terms of the type of bodywork, steering, chassis and engine with the motor vehicle defined in the Agreement;
(e) the corresponding goods, the corresponding motor vehicle and the corresponding parts are goods, vehicles and parts of a similar type as those defined in the framework of the Agreement which are distributed by the manufacturer or with the agreement of the manufacturer and which are subject to a distribution and service agreement;
(f) the motor vehicle manufacturer is a competitor who produces or procures the production of motor vehicles covered by the agreement or is a person associated with a person producing or procuring the production of motor vehicles covered by the agreement;
(g) connected persons shall mean persons who:
1. manufacturers of motor vehicles check and controlled by the manufacturer of motor vehicles,
2. controls the same person who controls the manufacturer of motor vehicles;
(h) control shall mean the holding of a business or share in capital of more than 50% or the right to appoint or withdraw a majority of the members of the statutory body, supervisory board, directors of a legal person or the possibility of otherwise exercising decisive influence over the management of a legal person;
(i) sale means other forms of transfer of goods to third parties (e.g. contract for the purchase of a hired item);
(j) know-how means a set of technical, commercial and other essential and identified experience and knowledge not known or generally available. Information necessary for the manufacture of motor vehicles or spare parts shall be considered to be material experience or knowledge. Such information shall be considered as an identified experience or knowledge which is sufficiently clearly described to enable it to be verified that it meets the criteria of secrecy and materiality. A description of how know-how may be part of an agreement on the distribution and service of motor vehicles, a separate agreement or recorded in another appropriate form,
(k) defined territory means a territory within the Czech Republic in which the exclusive supply obligation applies.
The prohibition provided for in Article 3 (1) of the Act also does not apply to agreements which, in addition to the obligations referred to in Article 1, contain an obligation on the supplier not to sell goods forming the subject of the agreement to final consumers or not to provide services for those goods in the designated territory.
Furthermore, the prohibition provided for in Article 3 (1) of the Act does not apply to agreements which, in addition to the obligations referred to in Article 1, contain the obligation of the distributor to:
(a) not to amend, without the consent of the supplier, the goods which form the subject-matter of the agreement or the corresponding goods, unless such an arrangement has been ordered by the final consumer;
(b) not to produce goods which compete with goods forming the subject of the Agreement;
(c) not to sell new motor vehicles which are offered by competitors other than the manufacturer of motor vehicles, with the exception of the sale by another legal entity, in different sales premises, with a different structure of managers, and in a way which does not create any risk of confusion with other goods;
(d) not allow a third party to make excessive use of the benefits of the investments made by the supplier, in particular with regard to the equipment of the workshop and the training of workers, after-sales service carried out in the joint workshop;
(e) not to sell spare parts which compete with goods forming the subject-matter of the Agreement and which are below the quality of those goods and not to use such spare parts for the repair and maintenance of such or the corresponding goods;
(f) without the consent of the supplier not to conclude, amend or terminate distribution and service agreements with competitors operating in the territory defined by the agreement for goods forming its object or for the corresponding goods (downstream distribution agreements),
(g) impose obligations on competitors with whom the distributor has concluded agreements for downstream distribution or service corresponding to those which it has assumed against the supplier in the agreement and which comply with the conditions laid down in this Decree;
(h) not to operate branches or warehouses outside the territory defined by the Agreement for the distribution of goods forming the subject-matter of the Agreement or of the corresponding goods or by means of advertising addressed to customers for goods forming the subject-matter of the Agreement or for the corresponding goods;
(i) not to trust third parties by distribution or service of goods forming the subject of an agreement or corresponding goods outside the demarcated territory;
(j) not to supply to competitors not operating within a distribution system, goods forming the subject-matter of the agreement or corresponding goods;
(k) not to supply other competitors with spare parts constituting the subject-matter of the agreement unless such spare parts are used for the repair or maintenance of a motor vehicle; or
(l) not to sell motor vehicles constituting the subject-matter of the agreement or corresponding goods to final customers through another person, unless that person has been authorised in writing by the final customer to purchase or take over a motor vehicle.
(1) Furthermore, the prohibition provided for in Article 3 (1) of the Act does not apply to agreements which, in addition to the obligations referred to in Article 1, also contain the obligation of the distributor
(a) comply with the requirements laid down in respect of the distribution and servicing of, in particular, sales premises and technical equipment for the service, the special and professional qualifications of the staff, the promotion, the removal of goods forming the subject of the agreement and the corresponding goods from the manufacturer, its storage and delivery to final consumers, and the provision of sales and post-sales services, repair and maintenance of goods forming the subject of the agreement and the corresponding goods;
(b) to order goods constituting the subject-matter of the agreement from the supplier only at a certain time or time, provided that the time limit between orders does not exceed 3 months;
(c) make efforts to sell the minimum quantity of goods forming the subject matter of the agreement in the defined territory and within a specified time period; where the minimum quantity of the Party has not been agreed upon, the third qualified person designated by the Agreement between the Parties shall be entitled to determine the minimum quantity;
(d) keep in stock the minimum quantity of goods forming the subject-matter of the agreement; where the minimum quantity of the Party has not been agreed upon, the third qualified person designated by the Agreement between the Parties shall be entitled to determine the minimum quantity;
(e) maintain a minimum number of demonstration vehicles; where the minimum number of parties has not been agreed upon, the third qualified person designated by the agreement of the two parties shall be entitled to determine the minimum quantity;
(f) to carry out and use only specified spare parts for the repair and maintenance of the goods forming the subject matter of the agreement and the corresponding goods,
(g) in general, inform the final consumer of the extent to which it is possible to use spare parts from other sources for the repair and maintenance of the goods forming the subject of the agreement or the corresponding goods; or
(h) inform final consumers that spare parts from other sources have been used for repair and maintenance.
(2) Where an agreement contains one of the obligations referred to in paragraph 1, the prohibition provided for in Article 3 (1) of the Act shall not apply to that agreement only if the supplier is obliged to exempt the distributor referred to in Article 4 (c) on objective grounds,
(a) the agreement must be concluded for at least five years and must provide for the obligation of the parties to the agreement to notify the other party, at least six months before the expiry of the period for which the agreement is concluded, of their intention not to conclude the distribution and service agreement for a further period or to extend the validity of the agreement for a further period; or
(b) where the agreement is concluded for an indefinite period, the period for unilateral termination shall be at least 2 years.
(3) Time limit for unilateral termination of the Agreement as referred to in paragraph 2 (b). (b) may be reduced to a period of at least 1 year if the supplier is obliged to pay a reasonable compensation to the distributor or is the distributor's new contractor, where the agreement is the first agreed with the distributor.
(4) The conditions for the application of the exemption provided for in paragraphs 2 and 3 and Article 6 of this Order shall be without prejudice to the right of the supplier to terminate the agreement by giving notice of one year in the event of a total change in the distribution system or a change in a substantial part thereof and the right of any Party to terminate the agreement in the event of a material breach of the agreement by the other Party.
However, the exemption from the prohibition provided for in Article 3 (1) of the Law provided for in this Decree only applies to agreements which contain:
(a) the explicit obligation of the distributor
1. repair and maintenance, including free warranty repairs and maintenance, regardless of which supplier's distributors within one supplier's distribution network have been purchased; and
2. impose on competitors operating in a demarcated territory with which the distributor has entered into an agreement containing its obligation under Paragraph 4 (f), at least to the extent that the distributor has undertaken to the supplier, and
(b) the explicit obligation of the supplier
1. Not to refuse, without reason, to consent to the conclusion, amendment or termination of the agreements which the distributor intends to conclude in the contractual territory to ensure further subsequent distribution,
2. not to apply the requirements referred to in Paragraph 5 (1) to individual distributors discriminately;
3. in the context of providing discounts to the distributor to distinguish goods constituting the subject-matter of the Agreement in particular on motor vehicles, spare parts and other goods; and
4. deliver to all distributors for the purpose of performing purchase contracts concluded between the distributor and the final consumer passenger cars which correspond to the types specified in the agreement and are sold by the manufacturer or with his consent on the market in the Czech Republic where they are to be registered.
(1) However, the prohibition provided for in Article 3 (1) of the Law always applies to agreements, even if they otherwise comply with the terms of the Decree, provided that:
(a) both sides of the Agreement or related persons are manufacturers of motor vehicles;
(b) the supplier reserves the right to enter into similar agreements with other distributors in a defined territory or to unilaterally modify the designated territories;
(c) the agreement directly or indirectly limits the distributor to freely determine prices and discounts for the sale of goods forming the subject-matter of the agreement or of the corresponding goods;
(d) the agreement directly or indirectly limits the freedom of the final consumer, the authorised person [§ 4 (l)] or the distributor to take goods constituting the object of the agreement or the corresponding goods from any competitor operating in a given distribution system on the market in the Czech Republic of its choice or to obtain service of those goods or to restrict the final consumer in the sale of those goods, unless it is carried out in an entrepreneurial manner for the purpose of achieving a continuous profit;
(e) the supplier is entitled to grant to distributors remuneration according to the final consumer's place of residence or registered office, without any objective reason for doing so;
(f) the supplier directly or indirectly limits the right of the distributor to acquire from third parties, at his choice, spare parts which compete with spare parts forming the subject-matter of the agreement and which achieve the quality of the goods;
(g) the manufacturer directly or indirectly limits the supplier of spare parts to supplying spare parts to traders at his choice, including those operating in the distribution system, provided that such spare parts achieve the quality of the goods forming the subject of the agreement;
(h) the manufacturer directly or indirectly limits the right of manufacturers of spare parts to place a trade mark or logo on their products supplied for the manufacture or service of goods forming the subject of the agreement or the corresponding goods in an effective and visible place;
(i) contain the right or obligation of the manufacturer to refuse the making available of technical information necessary for the repair and maintenance of goods forming the object of the agreement or of the corresponding goods or for the introduction of environmental protection measures for persons providing service to motor vehicles not operating in the distribution system, provided that such information is not protected on the basis of industrial or other intellectual property rights or does not constitute a knowhow. Only reasonable remuneration may be required for making such technical information available,
(j) the Agreement also contains arrangements for goods other than those covered by this Order or is used for such goods; or
(k) the agreement shall include commitments which are not covered by the general exemption under this Decree.
(2) In the cases referred to in paragraph 1 (c) to (i), the prohibition provided for in Article 3 (1) of the Act applies only to the provisions of agreements which have been agreed on behalf of or for the benefit of a manufacturer, supplier or other competitor operating within a distribution system in a designated territory.
By its decision, the Competition Authority may withdraw the advantages of the general exemption provided for in this Decree if, as a result of market developments, the effects of an agreement subject to a general exemption do not comply with the conditions for authorising an individual exemption under Article 8 of the Law. In particular, this may be the case where:
(a) the goods covered by the agreement or the corresponding goods are not exposed on the market to effective competition from competing goods; contract goods are not exposed to effective competition if the market share of such goods exceeds 30%; or
(b) a producer or competitor operating within a distribution system shall, when supplying goods forming the subject of the agreement or corresponding goods to distributors without objectively justifiable reason, require discriminatory prices or other trading conditions.
This Decree shall take effect on 1 July 2001.
Chairman:
Ing. Bednář v. r.
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Regulation Information
| Citation | Decree of the Office for the Protection of Competition No 204 / 2001 Coll., authorising a general exemption from the prohibition of agreements distorting competition pursuant to Article 3 (1) of Act No. 143 / 2001 Coll., on the Protection of Competition, for certain types of motor vehicle distribution and service agreements |
|---|---|
| Regulation Type | Order |
| Author | - |
| Collection | Code of Laws |
| Date of Promulgation | 20.06.2001 |
|---|---|
| Effective from | 01.07.2001 |
| Effective until | - |
| Status | Valid |
The regulation text is for informational purposes only.
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