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Business and Consumer Transaction

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Kompact Scooter Ltd (KS), the leading designers and manufacturers of electric scooters with the rechargeable batteries, plans to counter competition by completely blocking any possible entry of its competitors into the common market that is has already permeated in both United Kingdom and France. Its proposed terms to the intermediary sales companies (FR and SP) as contained in its five year agreements with the two companies grossly contravenes Article 101 of the Treaty of the Function European Union (TFEU) in a number of ways.

Article 101 TFEU prohibits any agreement between two or more undertakings as well coordinated practices that might bear a direct economic impact between the member states and in turn restricts healthy competition within the segments of the common market. KS demonstrates a number of such prohibitions in its agreements with the distributor companies, FR and SP. It singlehandedly fixes the retail and purchase prices of its products and other terms of trade without involving the FR and SP. In their decisions and agreement involving the undertakings, the manufacturer imposes sort of monopoly by secluding its distributors from establishing any form of connections or dealings with other suppliers and consumers of the same product (electric scooter) outside their authorized area of operations. As such, the restrictions KS impose on its undertakings by the use of a faulty trade agreement hinder competition.

In this case, Regulation 330/2010 can only apply if the agreement made between the undertakings, decision made by associations of undertakings, or concerted practice directly contribute towards enhancing production or circulation of the scooter within the common market or ensure consumer and regional economic benefit without necessarily eliminating competition. It is most notable that similar exemptions of the Article 101 (1) TFEU by the Regulation 330/2010 is also evident in Belgium whereby the law of distribution innocuous set of agreements brewers and pubs excluded foreign beers from the Belgian pubs. This only applies when an imminent competition from the outside seems overwhelming to allow the growth of local or regional industries.

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