Polish Distribution Agreements: When a Minimum Wholesale Rate Creates Competition-Law Risk
A counterparty requested two changes to a distribution agreement. The first concerned price: fixed rates would become minimum rates. The second sounded like drafting housekeeping: an “explicit separation of the wholesale relationship from the retail relationship.” Yet that second request raised a question that could undermine the entire payment mechanism. The answer was not in the draft agreement. It was in an extract from the counterparty’s Polish business register.
If you are negotiating with an aggregator, wholesaler, platform, or industry special-purpose vehicle, check who owns it and who makes its pricing decisions. Where several competing manufacturers stand behind the counterparty, a minimum-rate clause may no longer be simply a bilateral commercial term. It may reflect price coordination between competitors, prohibited under Article 6(1)(1) of Poland’s Act on Competition and Consumer Protection and Article 101(1)(a) of the Treaty on the Functioning of the European Union (TFEU).
If the payment provisions form part of a prohibited agreement, they are void by operation of law. A contract negotiated over months could lose its financial core. The practical question is how to identify that risk before signing—and how to structure the agreement to reduce it.
Key terms
| Term | Meaning in this article |
|---|---|
| Horizontal agreement | An arrangement between businesses operating at the same market level, such as competing manufacturers. An arrangement concerning price-fixing, market sharing, or restrictions on production may be prohibited. |
| Minimum rate | A floor for the price a buyer pays a supplier for goods or services. It can be an ordinary commercial term, but becomes problematic if competitors behind the supplier effectively set it. |
| Resale price maintenance (RPM) | A restriction preventing a buyer from reselling below a specified price. This is a separate issue: a minimum wholesale rate is not automatically RPM. |
| Representation | A contractual statement about a fact, rather than a general statement of intention. If it proves untrue, contractual liability and a damages claim may arise. |
| Leniency program | A procedure through which a participant in a prohibited agreement may obtain immunity from, or a reduction in, a fine by providing evidence and ending its participation. |
Why ownership changes the assessment of a minimum rate
A minimum wholesale rate can be routine. The wholesaler wants a floor for its remuneration; the distributor wants to understand its purchase cost. The concern is who actually decides the rate.
The structure missing from the draft
Consider a wholesaler that brings together products from multiple manufacturers and resells them in its own name. It asks to replace fixed rates with minimum rates and to separate the wholesale relationship expressly from the retail relationship.
An extract from the Polish register of entrepreneurs then shows that:
- Ten manufacturers competing in the end market are shareholders in the wholesaler.
- Each has an equal shareholding.
- Each has a representative on the supervisory board.
That structure does not, by itself, prove an infringement. But the wholesaler’s minimum rate might be a price agreed directly or indirectly by the competing manufacturers that control it, rather than a price determined independently by the wholesaler.
The Polish and EU rules
Article 6(1)(1) of the Polish Act on Competition and Consumer Protection prohibits agreements that directly or indirectly fix prices or other conditions for buying or selling goods. Under Article 6(2), prohibited agreements are void by operation of law. At EU level, Article 101(1)(a) TFEU addresses the prohibition, and Article 101(2) addresses invalidity.
An anticompetitive object can be enough for the prohibition to apply; an actual price increase need not be shown. The concern is that the mechanism enables coordination.
Is the joint venture independent?
A company owned by competitors does not automatically breach competition law. The European Commission’s 2023 Horizontal Guidelines distinguish between structures and arrangements that require different assessments:
| Structure | Classification described in the source | Pricing risk |
|---|---|---|
| A full-function joint venture that operates on a lasting, autonomous basis and has its own management board making pricing decisions | A concentration under Article 3(4) of Regulation No. 139/2004 | Lower: pricing decisions are the company’s own |
| A joint venture without full autonomy, or with shareholder arrangements extending beyond ordinary corporate rights | A horizontal agreement under Article 101(1) TFEU and Article 6(1) of the Polish Act | Higher: the rate may be treated as an arrangement between competitors |
The dividing line is not automatic. Examine whether pricing decisions are made by the joint venture’s management board or by its competing shareholders.
If you are negotiating with a business that has a complex ownership structure, contact us to assess that structure before signing.
Four risks to assess
1. The agreement may lose its financial core
If the remuneration provisions are found to form part of a prohibited agreement, they are void by operation of law. No court judgment or decision by Poland’s competition authority, UOKiK, is required for that invalidity to arise.
Under Article 58 § 3 of the Polish Civil Code, invalidity of one part of a contract does not necessarily invalidate the whole contract. But if remuneration is central to a distribution agreement, it may be difficult to argue that the parties would have entered into the agreement without it.
Settlement for a period in which the agreement was performed is then based on the Polish Civil Code rules on unjust enrichment, including Articles 405 and 410. There is no single established valuation method, creating scope for a further dispute.
2. The business and its managers may face separate fines
| Fine | Polish legal basis | Maximum stated in the source |
|---|---|---|
| Fine on the undertaking | Article 106(1)(1) of the Act on Competition and Consumer Protection | Up to 10% of turnover in the year preceding the imposition of the fine |
| Personal fine on a manager | Article 106a(1) of the Act | Up to PLN 2,000,000 |
A fine on the undertaking does not require intentional conduct; negligence is sufficient. A personal fine requires intent and can concern someone who managed the undertaking during the infringement even if they no longer hold the position when proceedings begin. The two fines are independent. See UOKiK’s information on fines.
3. Your commercial information may reach competitors
The risk runs in both directions. Besides the possibility that competing shareholders coordinate the wholesaler’s rates, consider what information you provide to the wholesaler.
Planned retail prices, promotional calendars, margins, and channel-performance data would reach an entity whose shareholders may compete with you or your suppliers. The European Commission’s 2023 Horizontal Guidelines indicate that an exchange between competitors of individualized intended future prices or quantities may be a restriction by object, including when it passes through an intermediary company.
4. A contractual right may be difficult to exercise
Suppose you may reject an item subject to an increased rate only if you show that the price exceeds “commercial viability.” To use that right, you may have to:
- Establish what that imprecise criterion means.
- Prove that the item is commercially unviable, with the burden on you.
- Disclose your financial data if a dispute follows.
A right conditional on a subjective criterion you must prove is weaker than an unconditional right covering the same items.
Three contractual safeguards
1. Ask for verifiable representations about pricing
A broad statement that “the parties act independently” does little to reveal how a rate is set. Instead, seek specific contractual representations that:
- The wholesaler’s management board sets rates independently.
- Pricing decisions do not require shareholder or supervisory-board resolutions.
- Manufacturer-shareholders do not agree among themselves on the wholesaler’s pricing terms.
- The wholesaler does not provide shareholders with individualized information about the distributor’s prices, margins, or commercial terms.
These statements are also diagnostic. A refusal to give them is information, although it does not automatically establish an infringement. Pause signing and investigate how decisions are actually made. If a representation is given and proves untrue, contractual liability and a damages claim may arise.
2. Use an unconditional right to refuse an increased-rate item
Instead of allowing refusal only where an increased price fails a “commercial viability” test, provide for an unconditional right to refuse or withdraw any item subject to an increased rate without giving a reason.
| Contractual approach | What you must show to exercise the right | Dispute risk |
|---|---|---|
| Refusal conditional on “commercial viability” | That the item is commercially unviable, potentially using financial calculations and market comparisons | Higher: the other party may seek access to your data |
| Unconditional refusal or withdrawal | No commercial justification for the refusal | Lower: no viability test to contest |
During negotiations, ask not only, “Do we have the right?” but also, “What must we prove to use it?”
3. Keep promotional costs separate from wholesale remuneration
If the wholesaler should not participate in setting retail terms, its remuneration should not depend on your promotions:
- Remove automatic reductions in the wholesaler’s remuneration triggered by promotional retail sales.
- Agree on joint promotions with a particular manufacturer in a separate bilateral relationship, outside the wholesale arrangement.
- Do not give the wholesaler planned retail prices, promotion schedules, or channel-performance data.
This also reduces the risk that you are seen as participating in an exchange of commercially sensitive information through an entity controlled by competitors.
Pre-signing checklist for aggregators and wholesalers
Use this when negotiating with a wholesaler, aggregator, platform, or industry special-purpose vehicle.
| No. | Action | When |
|---|---|---|
| 1 | Obtain an extract from the counterparty’s Polish register of entrepreneurs. Check shareholders, shareholdings, and supervisory-body membership. | Before agreeing on the payment mechanism |
| 2 | Determine whether the shareholders compete with one another in a market where the counterparty or your business operates. | After reviewing the extract |
| 3 | If they do, treat minimum rates, rate ranges, and indexation as competition-law issues requiring review—not merely commercial points. | Before negotiating prices |
| 4 | Seek verifiable representations about how the counterparty sets prices. | Before finalizing pricing terms |
| 5 | Treat refusal to give those representations as a red flag and pause signing. | When the request is answered |
| 6 | Replace rights dependent on subjective tests with unconditional rights where appropriate. | When drafting item-refusal provisions |
| 7 | Restrict the commercial information you send to the counterparty, including prices, promotions, and margins. | When setting reporting and communication rules |
| 8 | Calculate an acceptable multiple of the base rate and propose a cap. | Before negotiating prices |
| 9 | Separate promotional costs from wholesale remuneration. | When drafting payment provisions |
| 10 | Review existing aggregator agreements for ownership structures and pricing clauses. | After addressing the current negotiation |
If you discover the issue after signing
Signing does not prevent further action. If you later discover that competitors control your counterparty and a pricing clause may form part of a prohibited agreement:
- Stop participating in the arrangement: Do not apply rates that may result from coordination between competitors, insofar as operationally possible.
- Preserve documents: Keep negotiation correspondence, register extracts, and internal analyses.
- Assess leniency promptly: Under Article 109 of the Polish 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 a response with other participants.
- Consult Polish competition-law counsel: The order of applications and the completeness of the evidence matter.
The leniency program also allows an applicant to submit a marker to secure its place in the queue before assembling the full documentation.
A minimum wholesale rate is not automatically resale price maintenance
A minimum wholesale rate concerns the price of the transaction between supplier and buyer. Resale price maintenance (RPM) concerns the price at which the buyer sells onward.
| Question | Minimum wholesale rate | Minimum resale price (RPM) |
|---|---|---|
| Which price is affected? | The supplier–buyer transaction price | The buyer’s onward selling price |
| Who is restricted? | The supplier, through a floor for its remuneration | The buyer, which may not resell below the specified price |
| What is the issue? | Usually a commercial term, but ownership and decision-making may reveal horizontal coordination | A hardcore restriction that excludes the block exemption under Vertical Block Exemption Regulation 2022/720 |
| Does market share resolve the concern described here? | No, where the issue is a horizontal agreement | No: the source identifies RPM as prohibited regardless of market share |
A minimum wholesale rate is not automatically RPM. It needs separate assessment if the mechanism indirectly influences onward selling prices—for example, through pressure, sanctions, limits on discounts, or bonuses conditional on a specified resale price. See the European Commission’s 2022 Vertical Guidelines.
Review who sets the price before finalizing the deal
The issue may not be visible in the contract. It may emerge only after you examine the counterparty’s shareholders and how its pricing decisions are made.
We help distribution businesses, e-commerce platforms, and SaaS providers using reseller models to:
- Verify a counterparty’s ownership before finalizing prices.
- Assess pricing clauses for competition-law risk.
- Draft representations and safeguards suited to the transaction.
- Audit existing wholesale agreements.
Contact us to review an agreement or pricing mechanism before it becomes a source of dispute.
Frequently asked questions
Must I check the register extract for every business partner?
The priority is counterparties with whom you agree on a pricing mechanism. The Polish register of entrepreneurs is accessible online. Review shareholders, shareholdings, and the supervisory board. If the shareholders compete with one another in a relevant market, examine each pricing clause more closely.
Can the risk affect me if I only accept the price as a buyer?
Yes. Article 6(1)(1) of the Polish Act covers direct and indirect price-fixing. The source identifies a risk that a buyer accepting a rate that effectively results from competitors’ arrangements could be regarded as a participant in or beneficiary of the arrangement. Also consider whether your commercial data flows to an entity controlled by competitors.
If the payment clause is void, can we still settle past performance?
Invalidity of one clause does not necessarily invalidate the whole agreement under Article 58 § 3 of the Polish Civil Code. But retaining a distribution agreement without its central payment mechanism may be difficult. Settlement for past performance is based on the unjust-enrichment provisions in Articles 405 and 410, potentially leading to a dispute about valuation.
How can we request representations without derailing negotiations?
Ask for statements of fact about the pricing process, such as: “The management board sets rates independently, without shareholder or supervisory-board resolutions.” If the counterparty refuses, investigate its actual decision-making before signing; refusal is a warning signal, not automatic proof of a prohibited agreement.
What if the counterparty refuses, but the contract is commercially important?
Seek more information before finalizing prices. Review the counterparty’s autonomy and decision-making, and consider a rate cap, an unconditional right of refusal, and restrictions on information flows. Signing without safeguards after a refusal means accepting a known risk.
What fines could apply to the company and its management?
The undertaking may face a fine of up to 10% of turnover in the year preceding imposition of the fine under Article 106(1)(1) of the Polish Act; negligence is sufficient. A manager may separately face a fine of up to PLN 2,000,000 under Article 106a(1); intent is required. That personal risk can concern someone who managed the undertaking during the infringement even if they have since left the role.
