Dual Distribution In Automotive: Competition Law Risks And National Approaches

March 2026 – This newsletter is the final entry in our three-part series on the legal aspects of transitioning to the agency model (where dealers become “agents” making sales on behalf of manufacturers) within the EU automotive sales sector.

The first part focused primarily on the basic parameters of agency models and on the issues surrounding the termination of existing contractual agreements. The second newsletter focused on agency models in relation to consumers, outlining the key obligations and risks for manufacturers and agents. In this entry, we examine the competition law risks associated with both the agency and dual distribution (selling vehicles both through independent authorized dealers and directly to end-consumers) models.

Vertical restraints

Across much of Central and Eastern Europe – specifically Austria, Czechia, Slovakia, Hungary, Bulgaria, Romania and Croatia – vertical restraints are presently assessed under the same EU competition law framework. In these countries, automotive sales that impose restrictions on territories, customer groups or pricing may be deemed in breach of Article 101 of the Treaty on the Functioning of the European Union (TFEU) and thus qualify as hardcore restrictions (illegal anti-competitive practices) under the Vertical Block Exemption Regulation (VBER). Under EU rules, resale price maintenance (RPM) (manufacturers establishing fixed or minimum prices for dealers) is treated as a hardcore restriction and is thus almost always unlawful in practice. Even indirect pressure on dealer pricing can expose manufacturers to fines and reputational damage. Moreover, a distribution model that appears compliant at the EU level may still raise red flags in practice if local authorities take a stricter view with respect to restrictions imposed on automotive dealers.

Exclusivity and information exchange

While many jurisdictions broadly follow the VBER framework, national variations remain crucial in terms of exclusivity and information exchange issues.

• In most EU jurisdictions, exclusive supply agreements are permitted if they do not foreclose the respective market and comply with the five-year limit principle outlined in VBER.
• Information exchange (sales volumes, customer data, pricing trends) is permitted only where strictly necessary for distribution efficiency – an increasingly critical issue for dual distribution structures.

Tying practices

In addition, some jurisdictions take markedly different approaches to tying practices (a vertical restraint where a supplier makes the sale of one product or service conditional on the purchase of another) that directly impact commercial strategy:

• Austria (EU outlier): Under Austrian law the concept of “relative market power” applies to the relation between a manufacturer and its dealer to capture an economic dependency of the dealer. If relative market power exists in a specific manufacturer-dealer relation, tying practices, such as conditioning the purchase of cars on the purchase of marketing material and services, may qualify as an abuse of dominance even if the manufacturer does not have a dominant position outside of the dealership contract.
• Turkey: Exemptions for tying arrangements depend on the supplier’s market share remaining below 30%.
• Serbia: Tying practices may be permitted if deemed to generate economic or technological benefits for customers, but information exchange between competitors is closely scrutinised and may be found anti-competitive.

“One-size-fits-all” distribution agreements are thus increasingly risky for automotive sellers operating today. Indeed, local regulatory deviations can fundamentally alter the nature of the respective legal assessments.

Summary

Dual distribution – manufacturers selling vehicles both through independent authorized dealers and directly to end-consumers – offers clear commercial upsides. However, this in fact increases, not decreases, non-compliance risks. Authorities today are paying closer attention to how automotive manufacturers manage their relationships with independent dealers. Case law remains comparatively less developed across many CEE jurisdictions, in sharp contrast to most western European countries.

For automotive manufacturers, successful market entry and expansion now depend on:

• Country-specific distribution agreements
• Tailored compliance protocols
• Strict controls on pricing conduct and information flows

Dual distribution arrangements can unlock significant commercial value in the automotive sector. However, the real competitive advantage lies in ensuring the provision of a detailed national competition law analysis. Manufacturers able to proactively adapt their distribution models to local regulatory environments will move faster, scale safer, and avoid costly enforcement surprises.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.