Sole distribution agreements in the context of the general principles of free trade and competition

Amongst the main concerns for producers is how to get their product to market. Therefore, the system of distribution chosen is vital to commercial success, considering the resources invested in the development and production of the product. In considering the most effective method of bringing the product to market, cost-effectiveness aside, a producer would be faced with two options: to perform distribution within the firm, or to outsource. There may be occasions where the best option may be to outsource the function where the producer wishes to market his product abroad and finds it more viable to use the services of another who is more familiar with the intended market conditions, the product may need some degree of specialist knowledge, or where it may be more cost-effective not to distribute himself or to incur additional costs of supplying a large number of distributors. Here, the producer has a number of options: appointing an agent, appointing a franchisee, using technology licensing, or using an independent distributor.