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COMPETITION • EUROPEAN LAW • RESTRICTIVE AGREEMENTS
According to the Court of Justice, agents are not in principle undertakings within the meaning of Article 101(1), unless their actions are fully independent. A motor vehicle agent who assumes substantial risks inseparable from that activity is an independent intermediary subject to compliance with European competition rules in the same way as the operator of a service station,  who is independent of his supplier if he assumes a significant proportion of the financial and commercial risks relating to the sale of fuel. Likewise, an intermediary who, at the same time as distributing for the account of the principal, undertakes a very considerable amount of business for their own account on the product or service market at issue, does not form an economic unity with its principal. However, dual representation by an agent is not enough to call into question the economic unit formed with one of the principals, insofar as he does not personally engage in substantial transactions on the market concerned as an independent trader. On the other hand, the agent forms a unit with his principal when he does not bear the risks associated with failures to deliver or defective deliveries or the insolvency of customers, does not finance the stocks and does not make any specific investments, even though he incurs certain incidental negligible and limited expenses.
The Commission, in its Vertical Restraints Guidelines, declares Article 101(1) not to be applicable to agency agreements under which the agent is vested with the power to negotiate and/or conclude contracts on behalf of another person (the principal), either in the agent's own name or in the name of the principal, on condition that the agent does not bear the financial or commercial risks, is not the owner of the contract goods and does not supply any of the contract services itself. If contract-specific risks are incurred by the agent, it will be enough to conclude that the agent is an independent distributor. The Guidelines set out a list of criteria which must be taken into account in determining that the agent bears no financial or commercial risk.
Such is the case where the agent: a) does not contribute to the costs relating to the supply/purchase of the contract goods or services, including the costs of transporting the goods. This does not preclude the agent from carrying out the transport service, provided that the costs are covered by the principal; b) does not maintain at its own cost or risk stocks of the contract goods, including the costs of financing the stocks and the costs of loss of stocks and can return unsold goods to the principal without charge, unless the agent is liable for fault (for example, by failing to comply with reasonable security measures to avoid loss of stocks); c) does not undertake responsibility towards third parties for damage caused by the product sold (product liability), unless, as agent, it is liable for fault in this respect; d) does not take responsibility for customers' non- performance of the contract, with the exception of the loss of the agent's commission, unless the agent is liable for fault (for example, by failing to comply with reasonable security or anti-theft measures or failing to comply with reasonable measures to report theft to the principal or police or to communicate to the principal all necessary information available to him on the customer's financial reliability); e) is not, directly or indirectly, obliged to invest in sales promotion, such as contributions to the advertising budgets of the principal; f) does not make market-specific investments in equipment, premises or training of personnel, such as for example the petrol storage tank in the case of petrol retailing or specific software to sell insurance policies in case of insurance agents, unless these costs are fully reimbursed by the principal; g) does not undertake other activities within the same product market required by the principal, unless these activities are fully reimbursed by the principal.
The inclusion of certain terms in the contract will be an indication of the agent's dependence: limitations on the territory in which the agent may sell these goods or services, the customers to whom he may sell the goods or services, fixing the prices and conditions at which the agent must sell or purchase these goods or services. However, even if the principal bears all the risks, the agreements may still facilitate collusion, inter alia when a number of principals use the same agents while collectively excluding others from using these agents, or when they use the agents to collude on marketing strategy or to exchange sensitive market information.
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