Blugas Limited/distributors [1995] IECA 439 (27th October, 1995)

Blugas Limited/distributors [1995] IECA 439 (27th October, 1995)

The notified distribution agreement does not offend Section 4(1) of the Competition Act, 1991 because the distributors are significant shareholders in Blugas and exercise a degree of control, making the restrictions justifiable in these circumstances. If the shareholding ceases, the circumstances change materially and the certificate would no longer apply.

Citation
[1995] IECA 439
Parties
Applicant: Blugas Limited; Distributor/shareholder: Suttons Oil Ltd; Distributor/shareholder: Three Rivers Oil Ltd; Former Distributor/shareholder: Jones Oil Ltd
Jurisdiction
Ireland
Procedural Posture
Competition Authority Notification/decision / Authority Decision on Notification for Certificate Under Section 4(4) Competition Act 1991
Outcome
Certificate granted; agreement does not offend Section 4(1) of the Competition Act, 1991 as long as distributors remain significant shareholders.
Legal Topics
Exclusive Distribution Agreements, Shareholder Distributor Relationships, Non Compete Clauses, Section 4 Competition Act 1991, Vertical Agreements
Competition Law Exclusive Distribution Agreements Shareholder Distributor Relationships Non Compete Clauses Section 4 Competition Act 1991 Vertical Agreements

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Parties

Blugas Limited

Applicant

Suttons Oil Ltd

Distributor/shareholder

Three Rivers Oil Ltd

Distributor/shareholder

Jones Oil Ltd

Former Distributor/shareholder

Procedural Posture

Competition Authority Notification/decision / Authority Decision on Notification for Certificate Under Section 4(4) Competition Act 1991

Legal Issues

  1. 1 Whether the standard distribution agreement between Blugas and its distributor-shareholders offends Section 4(1) of the Competition Act, 1991
  2. 2 Whether restrictions in the agreement (including exclusivity and post-termination non-compete clauses) are anti-competitive under Irish competition law

Ratio Decidendi

The notified distribution agreement does not offend Section 4(1) of the Competition Act, 1991 because the distributors are significant shareholders in Blugas and exercise a degree of control, making the restrictions justifiable in these circumstances. If the shareholding ceases, the circumstances change materially and the certificate would no longer apply.

Court Disposition

Certificate granted; agreement does not offend Section 4(1) of the Competition Act, 1991 as long as distributors remain significant shareholders.

Orders

  • Certificate issued stating the standard agreement between Blugas Ltd and its two distributors does not offend Section 4(1) of the Competition Act, 1991, provided the distributors are significant shareholders.
  • Material change (disposal of shareholding) would affect the validity of the certificate.