The counterparty requested two changes to the agreement. The first concerned money — the rates were to be minimum rather than fixed. The second looked like a cosmetic edit — an “explicit separation of the wholesale relationship from the retail relationship". It was the second change that could invalidate the entire remuneration mechanism. And the answer was found not in the draft agreement, but in an extract from the other party’s register of entrepreneurs.
If you are negotiating a distribution agreement with an aggregator, wholesaler or industry special-purpose vehicle — check who is behind it. When your counterparty’s shareholders include several competing manufacturers, an “ordinary" minimum-rate clause takes on a different legal classification. It ceases to be a commercial term and begins to resemble a price-fixing agreement between competitors — prohibited under Article 6(1)(1) of the Act on Competition and Consumer Protection and Article 101(1)(a) TFEU.
The consequence? The remuneration provisions are void by operation of law. An agreement negotiated for months loses its financial core.
In this article, I will show you how to identify this risk before signing an agreement and which three contractual solutions can protect you against it.
Key concepts worth knowing
Before we move on to the analysis, here are a few terms that will appear later:
| Concept | What it means |
|---|---|
| Horizontal agreement | An arrangement between entities operating at the same level of the market — for example, between competing manufacturers. It is prohibited if it concerns price-fixing, market sharing or limiting production. |
| Minimum rate | The lowest price a buyer pays a supplier for goods or services. In itself, it is a standard commercial term — it becomes problematic when it is effectively set not by the counterparty but by the competitors behind it. |
| RPM (resale price maintenance) | A condition imposed on the buyer under which it may not resell goods below a specified price. This is a separate legal concept — not every minimum wholesale rate constitutes RPM. |
| Representations | Statements of fact included in an agreement. If they are untrue, liability arises — unlike in the case of general declarations of intent. |
| Leniency programme | A procedure allowing a participant in a prohibited agreement to obtain immunity from or a reduction in a fine, provided that it supplies evidence and ceases its participation. |
Why an “ordinary" minimum rate changes the legal classification
A minimum rate in a distribution agreement is standard market practice. The wholesaler wants a floor for its remuneration. The distributor wants to know the purchase cost. This is normal.
The problem arises when you check who sets that rate.
The structure you cannot see in the draft agreement
Imagine the following situation: you are negotiating an agreement with a wholesaler that aggregates products from multiple manufacturers and resells them in its own name. The wholesaler requests two changes — the rates are to be minimum rather than fixed, and the wholesale relationship is to be explicitly separated from the retail relationship. Both requests sound standard.
But an extract from the register of entrepreneurs reveals something else:
- The wholesaler’s shareholders are ten manufacturers competing in the end market
- Each of them holds an equal share of the share capital
- Each has its own representative on the supervisory board
In such a structure, the wholesaler’s minimum rate may not be its own price. It may be a price agreed — directly or indirectly — between the competitors controlling it.
What the law says
Article 6(1)(1) of the Act on Competition and Consumer Protection prohibits agreements that directly or indirectly fix prices or other conditions for the purchase or sale of goods. The sanction: invalidity by operation of law — Article 6(2) of the Act.
At EU level, the prohibition arises from Article 101(1)(a) TFEU, while invalidity arises from Article 101(2) TFEU.
An anti-competitive object is sufficient for the prohibition to apply — the effect does not need to occur. There is no need to prove that prices actually increased. It is enough that the mechanism enables coordination.
When a joint venture is autonomous and when it is not
Not every company controlled by competitors automatically infringes competition law. The European Commission’s 2023 Guidelines on horizontal cooperation agreements distinguish between two situations:
| Situation | Classification | Risk |
|---|---|---|
| Full-function JV — operationally autonomous, lasting, with its own management board making pricing decisions | Concentration (Article 3(4) of Regulation No 139/2004) | Lower — pricing decisions are the company’s own decisions |
| JV without full autonomy or with arrangements between shareholders extending beyond corporate rights | Horizontal agreement (Article 101(1) TFEU / Article 6(1) of the Act on Competition and Consumer Protection) | High — the pricing rate may be regarded as an arrangement between competitors |
The dividing line is not automatic. It depends on whether the pricing decision is made at the company’s management-board level or at the level of the shareholders who are competitors.
Contact us if you are negotiating an agreement with an entity that has a complex ownership structure and want to assess the risk before signing.
What risks does such an agreement create — and for whom?
Risk no. 1: invalidity of the agreement’s financial core
If the remuneration provisions are found to form part of a prohibited agreement, they become void by operation of law. No court judgment or decision by UOKiK is required — invalidity occurs automatically.
Article 58 § 3 of the Civil Code states that the invalidity of part of an agreement does not necessarily entail the invalidity of the whole agreement. But if the remuneration mechanism was at the core of the contract — as it usually is in a distribution agreement — it is difficult to argue that the agreement would have been concluded without it.
Settlement for the period during which the agreement was performed is governed by the provisions on unjust enrichment (Articles 405 and 410 of the Civil Code). There is no single established valuation method — which means another dispute.
Risk no. 2: antitrust sanctions
| Type of sanction | Legal basis | Maximum amount |
|---|---|---|
| Fine imposed on an undertaking | Article 106(1)(1) of the Act on Competition and Consumer Protection | Up to 10% of turnover in the year preceding the year in which the fine is imposed |
| Fine imposed on a manager | Article 106a(1) of the Act on Competition and Consumer Protection | Up to PLN 2,000,000 |
A fine imposed on the company does not require intent — negligence is sufficient. A personal fine imposed on a manager requires intent, but it applies to the person managing the undertaking during the period of the infringement — even if that person no longer holds the position when proceedings are initiated (source: UOKiK — Fines).
The two fines are independent of each other.
Risk no. 3: leakage of commercial data
The competition-law risk is two-way. The problem is not only price-fixing by an entity controlled by competitors. It is also the flow of your commercial information to such an entity.
If you provide the wholesaler with planned retail prices, promotional schedules or margin data, that information reaches an entity whose shareholders compete with your suppliers or with you.
The European Commission’s 2023 Horizontal Guidelines indicate that the exchange of individualised intended future prices or quantities between competitors may constitute a restriction by object — regardless of whether it takes place through an intermediary company.
Risk no. 4: a right you cannot exercise
A separate problem concerns how contractual safeguards are structured. If your right to refuse an item subject to an increased rate depends on demonstrating that the price “exceeds the threshold of commercial viability", you have a right whose exercise requires you to:
- Define what “commercial viability" means (a subjective rather than precise criterion)
- Prove that the item is commercially unviable — with the burden of proof resting on you
- Disclose your own financial data in the event of a dispute
A right subject to a subjective criterion that must be demonstrated by the party entitled to exercise it is weaker than an unconditional right with the same scope.
Three contractual solutions that mitigate the risk
Solution 1: verifiable representations instead of general declarations
A declaration that “the parties act independently" achieves nothing. It cannot be verified or used as a basis for consequences.
Instead, include representations regarding the specific pricing decision-making process in the agreement — statements by the counterparty that:
- The rates are set independently by the wholesaler’s management board
- Pricing decisions do not require resolutions by the shareholders or the supervisory board
- The shareholders who are manufacturers do not agree among themselves on the pricing terms offered by the wholesaler
- The counterparty does not provide the shareholders with individualised data concerning the distributor’s prices, margins or commercial terms
A representation serves a diagnostic function. A refusal to give it is information — a signal that the pricing decision may be made at shareholder level. In such a situation, pause the signing process and commission an in-depth analysis.
An untrue representation gives rise to contractual liability and liability for damages.
Solution 2: an unconditional right instead of a subjective criterion
Instead of a right to refuse “if the price exceeds the threshold of commercial viability", include an unconditional right to refuse or withdraw any item subject to an increased rate, without stating a reason.
The commercial effect is the same. The difference lies in what you must prove to exercise the right:
| Structure | What you must demonstrate | Risk of dispute |
|---|---|---|
| Subjective criterion (“commercial viability") | That the price is commercially unviable — financial data, calculations and market comparisons | High — the other party may demand access to your data |
| Unconditional right | Nothing — refusal without stating a reason | Low — no grounds for challenge |
During negotiations, it is worth asking not only “do I have this right?" but also “what do I have to prove to exercise it?".
Solution 3: separate promotional costs from wholesale remuneration
If the wholesaler is not to participate in setting retail terms, its remuneration should not depend on your promotional campaigns.
- Remove from the agreement any automatic reduction in the wholesaler’s remuneration for promotional sales
- Agree joint promotions with a specific manufacturer in a separate bilateral relationship — outside the wholesale relationship
- Do not provide the wholesaler with planned retail prices, promotional schedules or channel performance data
This restriction works both ways — it protects you from the allegation that you are participating in the exchange of commercial information with an entity controlled by competitors.
Checklist: what to verify before signing an agreement with an aggregator
You can use the checklist below in any negotiations with a wholesaler, aggregator, platform or industry special-purpose vehicle:
| No. | Action | When |
|---|---|---|
| 1 | Obtain an extract from the counterparty’s register of entrepreneurs. Check its shareholders, shareholdings and the composition of its supervisory bodies. | Before agreeing on the remuneration mechanism |
| 2 | Answer the following question: do the counterparty’s shareholders compete with each other in the market in which the counterparty or you operate? | Immediately after analysing the extract |
| 3 | If so, move every pricing clause (minimum rates, ranges, indexation) from the “commercial" category to the “antitrust risk" category. | Before the pricing negotiation round |
| 4 | Include verifiable representations from the counterparty regarding the pricing process in the agreement. | During negotiations — before finalising the pricing terms |
| 5 | Treat a refusal to give the representation as a red flag — pause the signing process. | When the representations are given or refused |
| 6 | Replace rights based on subjective criteria with unconditional rights. | When drafting clauses concerning the refusal of items |
| 7 | Limit the flow of your own commercial information to the counterparty (prices, promotions, margins). | When establishing reporting and communication rules |
| 8 | Calculate an acceptable multiple of the base rate and propose a cap — before the other party does. | Before the pricing negotiation round |
| 9 | Separate the cost of promotional campaigns from wholesale remuneration. | When drafting the settlement mechanism |
| 10 | Retrospectively review existing agreements with aggregators in terms of ownership structure and pricing clauses. | After concluding the current negotiations |
What to do if you identify the risk after signing the agreement
Signing the agreement does not prevent you from taking action. If you subsequently discover that your counterparty is controlled by competitors and that a pricing clause may constitute a prohibited agreement:
- Cease participating in the agreement — do not apply rates that may result from arrangements between competitors, insofar as this is operationally possible
- Preserve documents — negotiation correspondence, register extracts and internal analyses
- Assess whether a leniency application can be submitted — under Article 109 of the Act on Competition and Consumer Protection, the first undertaking to provide information and evidence sufficient to initiate proceedings may obtain full immunity from a fine
- Do not coordinate with the other participants on how to respond to the risk
- Consult a lawyer specialising in competition law — the order of applications and the completeness of the evidence determine whether the application will be successful
It is worth knowing that the leniency programme allows for the submission of a so-called marker — securing the applicant’s place in the queue before the full documentation is compiled.
Minimum rate versus resale price maintenance — do not confuse them
A reader may confuse a minimum wholesale rate with resale price maintenance (RPM). These are two different legal concepts:
| Feature | Minimum wholesale rate | Resale price maintenance (RPM) |
|---|---|---|
| What it concerns | The transaction price between the supplier and the buyer | The price at which the buyer resells the goods |
| Who is restricted | The supplier (floor for its remuneration) | The buyer (it may not sell below the specified price) |
| Legal classification | Commercial term; the problem arises from the counterparty’s ownership structure | Hardcore restriction — excludes the block exemption under VBER Regulation 2022/720 |
| Market-share threshold | Irrelevant in the case of a horizontal agreement | Irrelevant — RPM is prohibited regardless of market share |
A minimum wholesale rate does not automatically constitute RPM. However, it requires a separate analysis — especially where the mechanism indirectly affects the resale price (e.g. through pressure, sanctions, restrictions on discounts or making bonuses conditional on applying a specified price — the European Commission’s 2022 Vertical Guidelines).
Before you sign an agreement with an aggregator — let us check together who sets your purchase price
The risk described in this article has one distinguishing feature: it does not arise from the wording of the agreement. It arises from the counterparty’s ownership structure — information that is not usually sought when negotiating a commercial agreement.
If you work with an aggregator, wholesaler, platform or industry special-purpose vehicle — and you do not know who is behind it — this is a good time to verify it.
We help distribution companies, e-commerce platforms and SaaS providers operating a reseller model to:
- Verify the counterparty’s ownership structure before finalising the pricing terms
- Assess pricing clauses for antitrust risk
- Prepare representations and contractual safeguards tailored to the specific transaction structure
- Audit existing agreements in the wholesale channel
Contact us — we will analyse your agreement and indicate whether the pricing clause needs to be revised before it becomes a source of problems.
Summary
A minimum rate in a distribution agreement is a standard commercial term — until it turns out that it is set not by your counterparty but by the competitors behind it. The risk is identified not from the wording of the agreement but from the other party’s register extract. Three solutions — verifiable representations, an unconditional right and the separation of promotional costs — can mitigate this risk before it becomes irreversible.
If you are negotiating an agreement with an entity that has a complex ownership structure — contact us before finalising the pricing terms.
Frequently asked questions
How can I know whether my counterparty is controlled by competitors — do I really need to check the register extract of every business partner?
Not every one — but every counterparty with which you agree on a pricing mechanism. An extract from the register of entrepreneurs is available online and takes several dozen minutes to analyse. Check the shareholders, their shareholdings and the composition of the supervisory board. If the shareholders compete with one another in the market in which the counterparty or you operate, every pricing clause requires additional analysis.
Does the risk apply to me if I do not set the price but merely accept it as the buyer?
Yes. The prohibition under Article 6(1)(1) of the Act on Competition and Consumer Protection covers both direct and indirect price-fixing. If you accept a rate that is effectively the result of arrangements between competitors, you may be regarded as a participant in or beneficiary of the agreement. In addition, the risk includes the flow of your commercial data to an entity controlled by competitors.
What happens if the remuneration provisions turn out to be invalid — do I lose the right to settlement for the cooperation to date?
The invalidity of a pricing clause does not necessarily entail the invalidity of the entire agreement — Article 58 § 3 of the Civil Code. But if the remuneration mechanism formed the core of the contract, it may be difficult to uphold the agreement without it. Settlement for the period during which the agreement was performed is governed by the provisions on unjust enrichment (Articles 405 and 410 of the Civil Code), which means that the services must be valued — and may lead to a dispute over the valuation method.
How can I include representations in the agreement without derailing the negotiations?
Representations concern facts, not intentions. Phrase them as statements regarding the pricing decision-making process: “the management board sets the rates independently, without resolutions by the shareholders or the supervisory board". If the counterparty genuinely operates independently, giving such a statement should not be a problem. A refusal is a signal that a more in-depth analysis should be conducted before signing.
What should I do if the other party refuses to give the representation but I badly need the contract?
A refusal does not automatically mean that the agreement is prohibited. It means that you need more information before finalising the pricing terms. Commission an analysis of the counterparty’s actual autonomy, verify how pricing decisions are made, and consider alternative safeguards — such as a rate cap, an unconditional right of refusal or restrictions on the flow of information. Signing the agreement without any safeguards after representations have been refused means consciously accepting the risk.
What fines could my company face, and am I personally liable as a management board member?
Fine imposed on an undertaking: up to 10% of turnover in the year preceding the year in which the fine is imposed (Article 106(1)(1) of the Act on Competition and Consumer Protection) — negligence is sufficient. Personal fine imposed on a manager: up to PLN 2,000,000 (Article 106a(1) of the Act on Competition and Consumer Protection) — intent is required, but it applies to the person managing the undertaking during the period of the infringement, even if that person no longer holds the position. The two fines are independent of each other.
