Jennifer Bello Baez

Exclusivity clause of concession agreements, its legal foundation on the act 176-33 and Dominican Republic-Central America Free Trade Agreement. Concession agreements are defined as the obligation from a manufacturer to produce and supply products to a concessionaire for its distribution under the terms established within a contract. In the Dominican Republic, this type of contracts are enforced by the act 173-66, about protection for manufactures and distributors. From this point on, the target is to protect the interests and rights of distributors and manufacturers, maintaining dynamism within local and international commercial partnerships. The exclusivity feature surrounding distribution contracts looks up to maintain a tight commitment between the signing parties for the further develop of commercial activities. Within the possible scenarios that could take place under this contract modality, we’ll find the obligations that are generated whenever the exclusivity clause generates a strong commitment from the concessionaire to distribute and strictly follow up on the sales performance exclusively for the distributor. This partnership assures a tight commitment from both parties; to distribute (concessionaire) and to provide the supplies (distributor), exclusively with one and the other according to the concession agreement that takes place. In cases where it has been agreed that the exclusivity clause will be for the benefit of the distributor due to direct acquisition from the concessionaire, the distributor creates the commitment to not provide such supplies to any other concessionaire. As a result of this partnership, it may look like other concessionaire parties are placed under disadvantage in front of the one that signed the concession agreement, and that’s why it is required to have a legal foundation that monitors these type of contracts and their repercussion. The exclusivity clause from concessions agreements enables a commercial union and development of distribution policies in favor of the signing parties. It also enhances dynamism within a country’s economy. However, this contract modality could affect the market’s competition and consumer’s rights since it could place third party concessionaires under disadvantage. This turns out as a negative consequence or disadvantage to the economy because manufactures are agreeing to supply a product to a specific concessionaire for it to be exclusively distributed. Therefore, the consumers will be obligated to acquire a product specifically from a distributor and having no further choices to analyze in the market. Since the Dominican Republic signed up the Dominican Republic-Central America Free Trade Agreement, (DR – CAFTA) in 2004; the government recognizes the exclusivity clause on a concession agreement if it has been previously discussed and agreed within the signing parts. However, the act 173-66 doesn’t dismiss concession agreements without an exclusivity clause; (indicated on the 5th article of the act). This paragraph does mention the exclusivity clause, but it does not disregard a possibility of an open concession. For any country that executes concession agreements with exclusivity clause, it’s important to maintain a legal foundation that protects the signing parties and the consumer’s rights. All of these, in order to avoid creating a monopoly that affects directly the economy and attempts to the rights of other concessionaires to participate within the distribution of a product or service. This contract modality could be very beneficial for a country’s economy when executed correctly and monitored constantly by the government to avoid any type of abuse or violation of the market’s policies and consumer’s rights. It is important to create a safe environment that guarantees impartial opportunities to all concessionaires to participate. The consumer’s right must be protected at all costs, since the product’s destiny or utility ends at their door. As a result of this, international laws have created a structure to be followed by the singing countries to prevent this type of abuse from occurring and provide a safe environment for consumers, distributors and concessionaires.