Court of Justice of the European Union (EuGH) ruling on exclusive distribution rights with significant practical implications for distribution law

The Court of Justice of the European Union (EuGH) ruling (Case C‑581/23) of 8 May 2025 sets important standards for exclusive distribution rights in the competition law assessment of exclusive distribution agreements within the EU.

The focus is on the question of under what conditions an active sales ban into exclusively assigned territories is compatible with Art. 101 AEUV and the block exemption regulation (VO Nr. 330/2010). This decision has significant implications for manufacturers, suppliers and exclusive dealers who work with territorial exclusivities – in particular when drafting competition law-compliant distribution agreements that are to include an exclusive distribution right.

Where was an exclusive distribution right agreed?

At the heart of the dispute was the question of whether a manufacturer can effectively instruct its distribution partners to refrain from active sales into a territory exclusively assigned to another dealer – and what conditions must be met for this.

In the specific case, the Dutch cheese manufacturer Cono granted the Belgian company Beevers Kaas BV through an exclusive distribution agreement the exclusive sole distribution right for Beemster cheese in Belgium and Luxembourg. The agreement had existed since 1993 and provided that Cono itself may not sell directly to other Belgian customers.

However, supermarkets of the Albert Heijn group (part of Dutch Ahold Delhaize) operating in Belgium also distributed Beemster cheese – but through their own sources of supply from Cono, which were not intended for the territory of Belgium. Beevers Kaas accused these companies of knowingly participating in circumventing the exclusive distribution agreement and thereby violating Belgian competition law (Art. VI.104 of the Economic Code).

The alleged legal violation in detail:

• Beevers Kaas accused the Albert Heijn companies of knowingly selling products intended for other markets actively in Belgium – that is, into the exclusively protected territory.
• According to Beevers Kaas, this constituted participation in the violation of its exclusivity rights.
• The supermarket group knew that Beevers Kaas had an exclusive distribution right, yet acted without protection against parallel imports.
• Furthermore, it was argued that this conduct effectively undermines the economic value of exclusivity and should be deemed an impermissible interference with contractually protected distribution structures.

By contrast, the Albert Heijn companies argued that this was not a prohibited agreement regarding resale. Cono had never imposed a sales ban on them for Belgium, and Beevers Kaas was not protected by an effective parallel protective obligation. Thus, the conditions were lacking that could justify exclusivity under competition law and at the same time bind other resellers.

The national courts in Belgium were thus faced with the question of whether an exclusivity clause in a distribution agreement is only competition law-compliant if all other resellers are actually and reliably excluded from active sales into the exclusive territory – and how strictly this protection must be demonstrated.

Core legal findings of the Court of Justice of the European Union (EuGH): No tacit agreement without proof

The Court of Justice of the European Union (EuGH) clarifies two essential points in its ruling:

1. Mere omission of sales activities is insufficient

The Court emphasizes that the mere finding that other customers did not actively sell into the exclusive territory does not suffice to demonstrate the existence of an "agreement" within the meaning of Art. 101 (1) AEUV. A sales ban relevant under competition law must result from express or tacit consent to a request by the supplier.

2. Burden of proof for exception falls on the supplier

For the invocation of the exception pursuant to Art. 4 lit. b no. i Regulation 330/2010, the supplier bears the burden of proof. It must demonstrate that:

• a concrete request to the other buyers has been made not to actively sell into the exclusive territory, and
• these buyers have consented to this request, whether expressly or by their conduct.

Mere factual conduct – for example, refraining from active sales – is sufficient only in conjunction with further objective, consistent evidence, such as monitoring systems, concerted conduct or express contractual clauses.

Relevance for contract design in distribution practice

The judgment has far-reaching practical consequences for enterprises that work with exclusive distribution systems or selective distribution systems:

Essential compliance points for distribution contracts:

• Active sales restrictions to exclusively assigned territories through an exclusive distribution right must be clearly and verifiably regulated in the contract.
• Conduct of the buyers must not be the sole basis for the assumption of an agreement.
• Evidence of communication (e.g. notices, written instructions, contractual clauses) is decisive.
• Enterprises should establish a compliance and monitoring system in order to document compliance with sales restrictions.

Recommendation for enterprises and legal departments regarding exclusive distribution arrangements

Enterprises that work with exclusive dealers or selective distribution partners should immediately review their distribution contracts and practical implementation with regard to the following points:

• Are exclusive territorial assignments and sales restrictions clearly defined and documented?
• Have all buyers been demonstrably informed of these requirements?
• Is there documented consent (express or implicit) from all relevant buyers?
• Are breaches actively monitored and, if necessary, sanctioned?

Conclusion: Court of Justice of the European Union (EuGH) requires proof of a genuine competition law agreement

The Court of Justice of the European Union (EuGH) has significantly raised the burden of proof for sales restrictions within the framework of exclusive distribution agreements. Enterprises that continue to rely on an exclusive distribution right or other exclusivity arrangements must now pay closer attention than ever to legally sound design and documentation – otherwise there is a risk of loss of competition law exemption and potentially substantial penalties.

Would you like to have your distribution contracts drafted or reviewed for legal compliance?

The attorneys at AVANTCORE Rechtsanwälte in Stuttgart are your contact for distribution law, competition law and contract design in the EU. We advise you on all aspects of distribution that is permissible under competition law – both domestically and across borders.