EXCLUSIVE: Agency agreement competition law warning
23 August 2021
Manufacturers will not be able to go half-heartedly into an agency agreement as they will be in breach of competition law, warned experts at last week’s Auto Retail Network Agency Agreement Conference.
In the case of an agency agreement, the retailer is not allowed to control the pricing of a product: it must be set by the manufacturer. If a brand wanted to get around this by allowing a retailer to share part of their commission with a customer, then they would be breaking the law, said Miles Trower, partner and head of competition at TLT LLP at the Agency Agreement Conference.
“On that basis, the agent can, in principle, deliver a discount to the product, but that is fraught with risk because it is still potentially an indirect restriction on resale pricing if the agent is unable to advertise the fact to the market at large that the discounts are available,” explained Trower.
The agency model is an interesting concept, he said, because of the potential control over pricing and discounts that a manufacturer could claim. However, it also potentially confers significant cost and risk to the OEM.Brands could be liable for many more costs under an agency agreement, with people-related costs, stock holding and distribution all potentially on the manufacturers’ shoulders.
Tags:
Agency Agreements 
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