Distribution agreement between competitors is a legal contract in which two or more businesses, who are also in the same field, agree to distribute each other`s products under specific terms and conditions.

A distribution agreement is a strategic move that can benefit both parties involved. For instance, a product manufacturer may need to access markets that their current distribution channels cannot reach, and partnering with a competitor can help them penetrate these markets. On the other hand, the competitor benefits from an additional revenue stream by selling a complementary product to their existing customers.

However, a distribution agreement between competitors can be complex and raises concerns about potential antitrust issues. Therefore, the agreement should be written with the help of legal professionals, and both parties should understand the agreement`s full implications.

Here are some key points to consider when drafting a distribution agreement between competitors:

1. Define the terms and conditions of the agreement.

The agreement should clearly state the terms and conditions under which the parties will distribute each other`s products. This includes the products covered, pricing, and how long the agreement will remain in effect.

2. Specify the geographical scope.

The agreement should explicitly state the distribution areas covered by the agreement. It is essential to specify the geographic scope of the agreement to ensure that both parties are not conflicting with each other in the same area.

3. Determine the exclusivity of the agreement.

The agreement should clearly state whether it is an exclusive or non-exclusive agreement. An exclusive agreement means that one party is the sole distributor for the other`s products in a particular region, while a non-exclusive agreement allows both parties to distribute each other`s products.

4. Set the minimum order quantities.

The agreement should specify the minimum order quantities of the products to be distributed. This will help both parties to estimate their production cost and prevent unnecessary losses.

5. Define intellectual property rights.

It is essential to define intellectual property ownership rights in the agreement. This includes any trademark or patent rights that the parties may have in the products to be distributed.

In conclusion, a distribution agreement between competitors needs to be specific, transparent, and mutually beneficial. It is a strategic move that can help both parties increase their market share and revenue streams. However, it is crucial to have legal professionals on board to avoid potential antitrust issues.