The impact of E.C. rules of unfair competition on distribution agreements

Abstract

Malta's economy is highly integrated with that of the European Communities (EC), such that around 75.80% of Malta's trade is carried out with Community Member States. The EC is in fact the principal market for locally manufactured goods. On the other hand the EC is also the main source of imports for Malta. The EC is therefore Malta 's principal trading partner. It is obvious, that since in part Malta's prosperity depends on success in overseas trading with the Community it is not only essential to have an economic policy which is in tune with that of the EC, but also highly necessary for Malta to adapt itself to significant areas of EC regulations in order to make it possible for Maltese enterprises to operate within as uniform a set of regulations as possible. This applies not only with regard to, for example, labelling and packaging requirements and safety standards, but also in respect of rules of competition - Distribution agreements for imports into the EC, whereby one party situated outside the Common Market appoints an exclusive distributor for a territory within the EC is governed by the same rules which apply where both parties are situated within the Community. The importance of harmonisation is further enhanced if seen from the perspective of Malta's prospective full EC membership. Once that Malta would be trading within the European Community, competition rules and regulations, applicable between Member States, will become equally applicable to Malta. To date, anticompetitve behaviour locally is not regulated by any specific code of antitrust law, but by a number of enactments made throughout the century, which in most cases were not directly intended to regulate restrictive trade practices, but were found by our courts to serve the purpose of bridging this enormous gap left in our law by the legislator, and were hence interpreted as being applicable to anticompetitive behaviour. This is not to say that Maltese law as applied to competition can adequately meet the needs of today's business society and practices. In this respect we are lagging far behind the EC in general, and its Member States in particular. Distribution being the backbone of overseas trade, I have undertaken to examine the effect of EC rules of unfair competition on vertical restraints. In the following chapters I have attempted to provide a comprehensive coverage of a broad range of distribution methods, as well as an analysis and explanation of the subject in the Maltese and the Community context, in an endeavour to draw together the various legal rules which might impinge upon distribution.