Distribution Agreements in Ukraine: The Clauses That Void the AMCU Exemption

Contract Structuring | JVS Law

A distribution agreement in Ukraine is dangerous not because of what it says but because part of what it says cannot be enforced. The clauses that look natural — “do not sell below the price list”, “work only in your region”, “do not carry competing brands while this agreement runs” — are precisely the list the Antimonopoly Committee treats as hardcore vertical restrictions.

The consequence is not that the clause fails. The consequence is that the whole agreement loses its automatic exemption and becomes concerted actions requiring AMCU clearance — which may not be implemented before that clearance is obtained.

Below: which clauses destroy the exemption, which look identical but are permitted, and how to work out whether any of this applies to you at all.

Neither the Civil Code nor the Commercial Code knows a “distribution agreement”. It is an unnamed contract: the parties build it under Articles 6 and 627 of the Civil Code on the principle of freedom of contract, assembling it from supply and, sometimes, services elements.

Two practical consequences follow, and both are usually raised last.

Characterisation. A court or the tax authority will read the substance, not the title. If your “distributor” does not in fact take title to the goods but merely introduces you to buyers for a fee, the contract will be read as agency — with different consequences for VAT, title to the goods and liability to the consumer.

Competition law. Freedom of contract ends where the Law on Protection of Economic Competition begins. Under Article 5, concerted actions include agreements in any form; Article 6 expressly treats as anticompetitive concerted actions those relating to setting prices or other conditions of sale and to dividing markets by territory, product range, volume or class of customers.

A distribution agreement does both by its nature. The only question is whether you fall within the exemption.

The exemption comes from the Typical Requirements for Vertical Concerted Actions, approved by AMCU Order No. 10-рп of 12 October 2017 (current wording of 10 July 2018). The logic mirrors the EU’s VBER.

Vertical restrictions are permitted and need no AMCU clearance where the supplier’s share on the market where it sells the goods does not exceed 30%, and the buyer’s share on the market where it buys them does not exceed 30%. Both conditions, together.

What happens if you outgrow the threshold — the transitional periods are worth knowing in advance:

• the share exceeds 30% but stays at no more than 35% — the exemption continues for two years after the year in which the threshold was first crossed;
• the share exceeds 35% — the exemption continues for one year;
• the two extensions combined may not exceed two calendar years.

A separate rule saves retail associations: the exemption covers vertical actions between an association and its members where all members are retailers and no member has annual Ukrainian turnover above EUR 25 million.

The exemption does not apply at all to vertical actions between competitors, subject to narrow carve-outs where the supplier manufactures and sells the goods and the buyer does not manufacture them, or where the supplier trades at several levels and the buyer only at retail and does not compete with it at the level where it buys.

The commonest clause that destroys the exemption concerns the resale price.

It is a hardcore restriction to restrict the buyer’s ability to determine the resale price. There is one exception: the supplier may set a maximum or recommended price.

But the exception has a tail, and that tail decides cases: a recommended price stops being recommended if, through pressure from one of the participants or incentives offered by it, it becomes a fixed or minimum price in practice.

So the drafting is only half the job. A discount that disappears when the distributor sells below the “recommended” price; a bonus for observing the price list; a letter demanding that prices be “brought into line” — each is evidence that the recommendation was a fiction. The agreement itself may be drafted impeccably.

Safe: a maximum price, a recommended price with no consequences for departing from it, and any terms about the price at which you sell to the distributor.

The second hardcore restriction is restricting the territory in which, or the class of customers to which, the buyer may sell. The general rule is that you may not. The only carve-out concerns the buyer’s own location — requiring it to operate from a particular place is permitted.

Then come four exceptions, built on a distinction that Ukrainian agreements almost never draw:

Active versus passive sales. Active selling is where the seller actively seeks out individual customers. Passive is where the customer comes on its own. You may restrict active selling; passive selling, never.

1. Active sales into an exclusive territory or to an exclusive customer group reserved by the supplier to itself or allocated to another distributor — provided the restriction does not reduce sales by that buyer’s own customers.
2. Sales to end users by a buyer operating at wholesale level — a wholesaler may be barred from retail.
3. Sales by members of a selective distribution system to businesses that the supplier has not authorised to resell within the territory allocated to that system.
4. Sale of components supplied for assembly to customers who would use them to manufacture goods similar to those the supplier makes.

Selective distribution deserves its own line. Members operating at retail level may not be restricted in either active or passive sales to end users — the only permitted prohibition is on operating from an unauthorised place. Equally hardcore is a ban on cross-supplies between members of the system, including between members at different levels of trade.

And one that equipment manufacturers forget: you may not restrict a component supplier’s ability to sell components as spare parts to end users and to repair businesses that the buyer has not appointed to service its goods.

The third way to lose the exemption: any direct or indirect non-compete obligation of indefinite duration or exceeding five years takes the agreement outside the Typical Requirements.

Two formulations that look harmless and produce the same result: “for the term of this agreement” where the agreement is open-ended, and automatic renewal with no cap on the aggregate term. Both read as indefinite.

What works is an express term of no more than five years, revisited when the agreement is renewed.

There is a structure that takes the relationship outside everything described above, and it is underused.

The Typical Requirements say expressly that mandate contracts and commercial agency are not treated as vertical concerted actions where the agent bears no, or only insignificant, commercial or financial risks. The price and territory restrictions forbidden to a distributor therefore work differently for a genuine agent — the goods remain yours, and you set the price of your own goods.

But “genuine” is determined by the risk list, not by the title of the contract. An agent becomes a participant in vertical concerted actions if any one of the following applies:

• it bears the costs of supplying or acquiring the goods (other than transport costs that are reimbursed);
• it is obliged to bear the principal’s advertising costs;
• it stores the goods at its own cost or risk (other than liability for loss or damage);
• it provides after-sales repair or warranty service at its own cost;
• it bears specific costs for equipment, premises or staff training that are not reimbursed;
• it is liable to third parties for damage caused by the goods, beyond liability imposed by law;
• it is liable for customers’ failure to pay — other than for its own negligence.

The practical conclusion: if you need control over price, build an agency model and genuinely keep the risks. A model in which the agent stores stock at its own cost, pays for advertising and answers for non-payment, while you set its prices, is distribution with hardcore restrictions — and that is how the AMCU will read it.

Competition law sets the outer limits. Inside them, agreements fail on four ordinary clauses.

Volumes. A minimum purchase obligation has to be tied to a consequence. “The distributor undertakes to purchase no less than N” without answering “or else what” is an aspiration, not an obligation. What works: loss of exclusivity, conversion to non-exclusive terms, a right to terminate. A penalty for shortfall works less well — you will have to prove loss.

Price and payment. Currency, exchange rate and the moment it is fixed; who bears bank charges; whether there is deferred payment and how it is secured. In a cross-border contract, add the settlement deadlines for which the Ukrainian party answers.

Quality and warranty. Separate three things that Ukrainian agreements habitually merge into one clause: conformity with specification on delivery, the warranty period owed to the end user, and the claims procedure between you and the distributor. Who funds warranty repairs and under what protocol is the question that surfaces exactly when it is too late to address.

Termination. Notice period, the fate of stock held by the distributor, the fate of the customer base and of trade mark use after termination. The absence of these is the main reason “we simply will not renew” turns into a dispute.

Where such a dispute is heard and under which law is a separate decision worth taking deliberately: arbitration or court in a cross-border contract and which law governs a Ukraine–EU contract.

1. Calculate both shares — yours and the distributor’s — for the preceding calendar year. Above 30% for either means the exemption does not apply and every restriction has to be assessed on its own.
2. Remove fixed and minimum resale prices. Keep a maximum or recommended price — and make sure departing from it carries no consequence in your bonus policy.
3. Rewrite territorial restrictions in terms of active sales. Passive sales are never restricted.
4. Check the non-compete term. No more than five years, and no “for the term of the agreement” where the agreement is open-ended.
5. If you need price control, move to an agency model and keep the risks yourself, against the list above.
6. Specify the consequence of missing volumes, not just the volumes.
7. Deal with termination in advance: notice, stock, customer base, marks.

Wider context in two neighbouring pieces: the legal framework and restrictions on distribution in Ukraine (civil-law basis, sector regimes for particular goods) and distributor contracts in the EU (VBER and European practice, if your market is not only Ukraine).

Sources

• Typical Requirements for Vertical Concerted Actions of Undertakings concerning the Supply and Use of Goods — AMCU Order No. 10-рп of 12.10.2017, current wording of 10.07.2018 (in Ukrainian). Source of the 30% threshold, the transitional periods, the hardcore list and the agency risk test.
• Law of Ukraine on Protection of Economic Competition — Articles 5, 6 and 10.
• Civil Code of Ukraine — Articles 6 and 627 (freedom of contract and unnamed contracts).

Updated in August 2026 from the current texts of the Law on Protection of Economic Competition and the AMCU Typical Requirements on the official Legislation of Ukraine portal. Market-share thresholds and the hardcore list are revised from time to time — check the current wording of the Typical Requirements before signing. This article states the general rule: assessing a particular agreement depends on how the product market is defined and on the parties’ actual shares.