4.Contract Drafting, Review and Negotiation

Q3 (Antimonopoly Concerns in Distribution Agreements)

We heard that we should be careful about the Antimonopoly Act in our distribution agreement, but for what points?

Resale price restrictions and limitations on sales territories can be problematic points.

Resale price restrictions on distributors are in principle prohibited under the Designation of Unfair Trade Practices. So, even if you want to exercise some control over the resale price, it is safer to only offer suggested resale prices.

As for limitations on sale territories, certain activities may be considered within the scope of the Designation of Unfair Trade Practices. A couple of examples would be a manufacturer with a certain market share strictly forbidding a distributor from selling in a specified territory , or when a territorial limitation results in product price maintenance .

For more details, please see the Japan Fair Trade Commission’s “Guidelines concerning Distribution Systems and Business Practices under the Antimonopoly Act ”.

(Posted: January 27, 2012)