Exclusivity clauses are contractual provisions by which one party undertakes not to contract with third parties for concrete products or services, typically for a defined period, within a specific geographical area, or with certain customers. They are common in distribution, agency, franchise, and supply agreements.
In Spain, exclusivity clauses are generally upheld under the principle of freedom of contract, enshrined in Article 1255 of the Civil Code. However, their enforceability is subject to compliance with both national and EU competition law.
Regulatory framework: Regulation (EU) 2022/720
Regulation (EU) 2022/720 governs vertical agreements and replaces Regulation 330/2010. It outlines the conditions under which exclusivity clauses may qualify for a block exemption following Article 101.3 of the Treaty on the Functioning of the European Union (TFEU).
Key conditions for a valid exclusivity clause
- Maximum duration: 5 years for territorial or customer exclusivity.
- Market share cap: The supplier and the buyer must not hold more than 30% of the market share in their respective relevant markets.
- Prohibition of hardcore restrictions: Resale price maintenance, for example, or a total ban on passive sales.
- Individual assessment: Agreements exceeding these thresholds are not automatically unlawful, but lose the benefit of the block exemption and require case-by-case examination.
National law: competition and unfair practices
At the national level, Article 1 of Law 15/2007 on the Defense of Competition prohibits any agreement restricting or distorting competition. Additionally, Law 3/1991 on Unfair Competition considers unfair practices that breach good faith or create economic dependency.
Case law from the Spanish Supreme Court (STS January 30, 2007) has upheld the validity of exclusivity clauses, provided they do not create an unjustified contractual imbalance. The National Commission for Markets and Competition (CNMC) has sanctioned agreements that unjustifiably hinder market access for third parties.
Checklist: requirements for a valid and effective clause
To ensure that an exclusivity clause is valid and enforceable, it is advisable to:
- Justify the clause from a business perspective (e.g., investment protection, long-term stability).
- Limit the duration to a maximum of 5 years to benefit from the block exemption.
- Precisely define the territorial and product scope.
- Avoid absolute bans on passive sales.
- Confirm the market shares of both contracting parties.
- Assess the potential impact on competition in the relevant market.
Conclusion
Exclusivity clauses are legitimate tools to protect commercial interests, but their design and enforcement must comply with both competition law and relevant case law. A well-structured clause, backed by a robust legal and economic analysis, reduces risk and enhances the durability of commercial partnerships.
