A gas products marketer, which sells products to several distributors, demanded that a store owner, with whom it had worked for 15 years, not advertise products at a price lower than the price it set. After the store owner objected to the demand, contending it is a forbidden restrictive arrangement, the distributor stopped supplying its goods without prior notice.
The Court found that the distributor must compensate the store. Termination of supply without prior notice constitutes a breach of contract. A demand to advertise a minimum price constitutes a restrictive arrangement forbidden under the Competition Law. A restrictive arrangement is an arrangement between businesses whereby one of the parties restricts itself in a manner that may prevent or reduce competition. An arrangement where the restriction concerns the price to be charged will be considered a restrictive arrangement. Here, the distributor terminated a long-standing relationship, without any prior notice, because the store refused to cooperate with the minimum price it set. The proposed arrangement is between businesses, is intended to restrict the store, and is likely to harm competition among the distributor's other marketers. Therefore, the distributor must compensate the store