Serial entrepreneur with an industrial psychology education and over 23 years of creating, consulting, and operating businesses. Loves mountain biking, snowboarding, and surfing.
We’ve been adding a lot of clients in Europe recently. And with this expansion, there has been a lot of learning! I thought it might be a good idea to share some of this knowledge in case your sales are expanding overseas.
The first thing to know is that unless you are lost, you can not mention MAP in Europe. Throughout Europe, it is verboten to mention price when talking about policies. I am no attorney but I have spent a lot of time talking to them that’s for sure.
What Europe does have is selective distribution. Here are the basics:
The set up can be very simple. There are two critical things that must be included.
First, you must state your products will ONLY be sold through the network of authorized sellers based on the criteria you set forth.
Second, you must state that no authorized seller may sell to an unauthorized seller.
Next, there are a few things that are not as mission-critical, but still important. The legal context in Europe is such that competition is strongly encouraged, and anything that limits competition is strongly discouraged. Well, limiting the number of resellers could certainly look like it reduces competition right?
Well, the good thing is there is a “safe harbor” that takes care of that issue. It is called Vertical Agreements Block Exemption Regulation or VBER. As long as your Selective Distribution agreement stays in this safe harbor you can not go to court. Yay!
So here is how it works.
1. Neither you as the brand, nor any reseller can have over 30% market share. So this means you need to allow a good number of sellers and you should probably not set yourself up as the sole seller or you are asking for trouble.
2. You may not include anything that clearly reduces competition. This is one reason why Minimum Advertized Price will not work. That would limit competition.
As long as you follow these 4 requirements you are good to go.
If you have more questions please reach out.
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