Is it ok to bypass the Irish Distributor to buy stock?

miko

Hi,

I want to import a product into Ireland to sell on my online store, there is an irish distributor for the product but I have found much cheaper prices if I import it from eastern europe.

Is it ok to import and sell it in Ireland without going through the irish distributor and also could they stop me from selling the product? Also they only sell to the trade where we sell to the general public if that makes a difference.

Any help would be appreciated.

Cheers,
Michael.

drunkmonkey

Hell Ya, get it as cheap as you can. Just be sure that the Euro supplier might not be charging you vat while the Irish supplier is, you still have to pay the vat at some stage so it's a false economy if your not comparing like for like, warranty/service is also something you should consider as well.

Peterdalkey

it is a very sticky area indeed if the products are protected by Trade Marks see http://www.tca.ie/images/uploaded/documents/Discussion_Paper_8.pdf and www.hg.org/articles/article_1174.html and http://lists.essential.org/pipermail/pharm-policy/2001-July/001327.html

rainbowdash

miko wrote: »

Hi,

I want to import a product into Ireland to sell on my online store, there is an irish distributor for the product but I have found much cheaper prices if I import it from eastern europe.

Is it ok to import and sell it in Ireland without going through the irish distributor and also could they stop me from selling the product? Also they only sell to the trade where we sell to the general public if that makes a difference.

Any help would be appreciated.

Cheers,
Michael.

Just ask the manufacturer and they will say yes or no. If they already have a distributer who is pushing their brand for maybe many years it would be unusual to shaft them for a new face but every circumstance is different.

3sixty

miko wrote: »

Hi,

I want to import a product into Ireland to sell on my online store, there is an irish distributor for the product but I have found much cheaper prices if I import it from eastern europe.

Is it ok to import and sell it in Ireland without going through the irish distributor and also could they stop me from selling the product? Also they only sell to the trade where we sell to the general public if that makes a difference.

Any help would be appreciated.

Cheers,
Michael.

They will stop you when and if they catch you.

A distributor agreement means nobody else can sell it in that country that they have the license for. They probably have it for Ireland and the uk.

Is this company selling the product online too ? if they are you will definitely be caught as customers talk online.

Just find a similar product and market it the same way:p every company /product has a weakness. Just find it.

3sixty

3sixty wrote: »

They will stop you when and if they catch you.

A distributor agreement means nobody else can sell it in that country that they have the license for. They probably have it for Ireland and the uk.

Is this company selling the product online too ? if they are you will definitely be caught as customers talk online.

Just find a similar product and market it the same way:p every company /product has a weakness. Just find it.

Not all distribution agreements are exclusive, as previously suggested just call the manufacturer and see what the possibilities are.

Peterdalkey

HOWEVER, to balance my previous post we also have the provisions of the Treaty of Rome and it later revisions which claim to protect the free circulation of goods within the EU!! http://www.walterfontanini.com/?p=48

rainbowdash

At the end of the day money will talk. If I import 50 ride on lawnmowers (general example) a year and somebody comes along with an offer to purchase 1000 units, in one go, then the manufacturer would be foolish not to speak to them.

If a small player makes an approach for 5 units then the answer would be quite different.

Compton

It depends on the product, if it's something that doesn't and can't break then go for it.

If it's something that does, think about the local warranty/cost in relation to shipping goods back (especially if they're large items)

miko

Cheers guys, thanks for all the info.

I think I might just go for it and start off on a small scale and see how it goes, I won't be selling to the trade so I won't be in direct competition with the distributor so hopefully they won't be bothered too much.

Peterdalkey

You are probably not going to see any repercussions from doing this. Firstly the licensing/distribution agreements need to be drawn up in a particular way and may not be compliant and secondly, it is a very expensive area to litigate in. Then there is the conflict between the other parties as to who is going to fund any legal action.
At least you are going in to this with your eyes wide open, and if you do get a serious “ Cease and Desist” letter from lawyers, you knew the risk from the outset!

u!

The Guvnor

An interesting area - parallel imports.

I assume you will buy from a distributor in the country where the brand or manufacturer is based.

As above go for it.

Always important for an Irish distributor to try to ensure imo that the prices on the market are the same as those elsewhere in EU.

I heard of one brand where the srp in Ireland was double what it is was in Poland which makes no sense to me.

Kevin Barry

Keeping it simple, suppliers will generally not enter discussions with you if there is already a sole distributer in place but may take your details in the event of distribution rights opening up.

The Guvnor

The supplier may honor the distribution agreements in place but a local distributor may not.

Peterdalkey

The Guvnor wrote: »

The supplier may honor the distribution agreements in place but a local distributor may not.

Or vice versa!

sandin

a local distributor means you can buy small quantities at a time, thus save your cashflow. It also gives you a local guarantee on the product and local service for anything else that goes wrong.

I used to think it was better to bypass local distributors even on products I bought in container loads - but now I work with the distributor, get discounts and back up supply when needed. And by adding my purchases into his orders, we both save on shpping costs and the factory price is lower - thus everyone is a winner.

So I'd have a meeting with the distributor and see what deal is available.

The Guvnor

Peterdalkey wrote: »

Or vice versa!

Very true.

If one were the Irish Agent etc. you'd be more aggrieved at this than someone sourcing it effectively outside of the manufacturers control.


Of course there is also the scenario where a manufacturer knowingly uses an intermediary to keep things at arms length.

My view is simplistic price here should be the same as in the UK or EU if it is then we have no reason to shop around for a better price.

RUDOLF289

It is important to make a distinction between imports from another EU or EEA memberstate and imports from outside the EU.

Essentially, once a product is available within the EU/EEA, the manufacturer or the Irish distributor is unable to stop you from importing the merchandise and sell it here. Essentially if the product is available in an EU member state, protection under copy right is deemed to be "exhausted". Also, under (EU) competition law, a manufacturer or a wholsealer that attempted to contractually restrain a rival distributor from competing with a wholesaler who had been granted an exclusive territory would be likely challenged in court. Even if licensed distributors were granted exclusive territories and restrained from competiting in another's territory, it is unlikely that a competition authoritory would sanction the restraint being placed on a third party that attempted to engage in parallel trade.

There is significant jurisprudence available both at EU and UK level (which would be a significant guideline for Irish courts) that would strongly suggest that as long as the product is available within the EU, parallel import of that product from another EU memberstate is permitted.

Please be aware that medicines or pharmacautical products that are subject to Irish Medical Board control require socalled Paraellel Product Authorisation.

If the product is sourced from outside the EU, a different legal regime applies. In that case the original manufacturer and/or wholesaler / distributor can (and likely will) enforce exclusive distribution agreements and/or intellectual property rights.

Hope this helps to clarify the issues raised by the OP

Cheers,
Rudolf289

RUDOLF289

Peterdalkey wrote: »

it is a very sticky area indeed if the products are protected by Trade Marks see http://www.tca.ie/images/uploaded/documents/Discussion_Paper_8.pdf and www.hg.org/articles/article_1174.html and http://lists.essential.org/pipermail/pharm-policy/2001-July/001327.html

Hello Peterdalkey,

interesting articles.

I take issue with the advice issued by A&L Goodbody. The relevant paragraph is ;

"Thirdly, by carefully drafting its contracts, a company can also lawfully prevent parallel trade in certain circumstances. For example, where products are sold to wholesalers outside the EU, a clause which prohibits the re-import of such products into the EU may be considered. Equally, where products are sold to agents within the EU for export, the contract could include appropriate drafting to prevent these products being sold in the EU."

According to an article mentioned in the Economic Policy October 2005, Printed in Great Britain (Copyright) CEPR, CES, MSH, 2005, In 2004 GlaxoSmithKline (GSK) was refused summary judgement in the UK Court of Appeal against a wholesaler who had bought a fixed dose combination HIV drug, produced under a GSK trademark, to resell in the UK, when the drugs had originally been sold to French distributors on the understanding that they were to be supplied to Africa for humanitarian purposes (at prices substantially lower that those paid in developed country markets) However, the products were sold to a Swiss company, who in turn sold them to a UK wholesaler, who in turn supplied them to UK Hospitals.

There are a number of additional cases involving the same UK wholesaler where they took on a number of other large (EU) Pharmaceutical Manufacturers where they succesfully pleaded their case. Therefore, it appears that A&L Goodbody's advise in this area could be challenged, even if there is a contractual arrangement in place that stipulates the goods sold have to be exported outside the EU.

Goods physically exported to a non EU country (or EEA) and subsequently re-imported appear to be protected. However, goods sold within the EU on the understanding they are being exported, may then be subsequently sold within the EU.

Amazing what a little research unearths.

for good order herewith some of the information ;

http://www.bailii.org/ew/cases/EWCA/Civ/2004/290.html
http://www.baepd.co.uk/pdf/GlaxoDowelhurst.pdf
http://www.ipsofactoj.com/international/2005/Part12/int2005(12)-009.htm

Cheers,
Rudolf289

Peterdalkey

RUDOLF289 wrote: »

Hello Peterdalkey,

interesting articles.

I take issue with the advice issued by A&L Goodbody. The relevant paragraph is ;

"Thirdly, by carefully drafting its contracts, a company can also lawfully prevent parallel trade in certain circumstances. For example, where products are sold to wholesalers outside the EU, a clause which prohibits the re-import of such products into the EU may be considered. Equally, where products are sold to agents within the EU for export, the contract could include appropriate drafting to prevent these products being sold in the EU."

According to an article mentioned in the Economic Policy October 2005, Printed in Great Britain (Copyright) CEPR, CES, MSH, 2005, In 2004 GlaxoSmithKline (GSK) was refused summary judgement in the UK Court of Appeal against a wholesaler who had bought a fixed dose combination HIV drug, produced under a GSK trademark, to resell in the UK, when the drugs had originally been sold to French distributors on the understanding that they were to be supplied to Africa for humanitarian purposes (at prices substantially lower that those paid in developed country markets) However, the products were sold to a Swiss company, who in turn sold them to a UK wholesaler, who in turn supplied them to UK Hospitals.

There are a number of additional cases involving the same UK wholesaler where they took on a number of other large (EU) Pharmaceutical Manufacturers where they succesfully pleaded their case. Therefore, it appears that A&L Goodbody's advise in this area could be challenged, even if there is a contractual arrangement in place that stipulates the goods sold have to be exported outside the EU.

Goods physically exported to a non EU country (or EEA) and subsequently re-imported appear to be protected. However, goods sold within the EU on the understanding they are being exported, may then be subsequently sold within the EU.

Amazing what a little research unearths.

for good order herewith some of the information ;

http://www.bailii.org/ew/cases/EWCA/Civ/2004/290.html
http://www.baepd.co.uk/pdf/GlaxoDowelhurst.pdf
http://www.ipsofactoj.com/international/2005/Part12/int2005(12)-009.htm

Cheers,
Rudolf289

Great work and clarity Well done Rudi.

Cheers

Peter