Between control and competition: can manufacturers restrict distributors and retailers?

published on 18 August 2025 | reading time approx. 5 minutes

Manufacturers are increasingly confronted with situations where, after delivering goods to major retailers, their products appear in open sale through individual entrepreneurs (hereinafter referred to as “IEs”) or marketplaces.

In an attempt to maintain control over distribution and pricing policy, a manufacturer may seek to either limit the product range supplied to a specific buyer or prohibit the resale of goods to third parties. A logical question arises: is it possible to build a supply model that is both efficient and compliant with antitrust legislation?

From a business practice standpoint, such measures may seem reasonable:

to limit channels
protect the brand
minimize dumping and unauthorized resale

The role of the agency for protection and development of competition (APDC) – ensuring freedom of competition

However, the legal framework presents a different perspective. The issue lies in the fact that the approaches of the Kazakh antitrust authority — the Agency for Protection and Develop-ment of Competition (hereinafter – APDC) — are based not only on the formal provisions of contracts, but primarily on the economic effect resulting from the behavior of the supplier and its partners.

For instance, Article 169 of the Entrepreneurial Code of the Republic of Kazakhstan explicitly prohibits any agreements and concerted actions that lead or may lead to a restriction of competition. This also includes vertical agreements that limit territory, range of buyers, terms, or volumes of product sales.

What does this mean in practice? If a manufacturer provides one retailer with the full product line and another — only a limited assortment without an objective and transparent rationale, this may be interpreted as creating discriminatory conditions that violate the principles of fair competition. Even if the contract does not explicitly contain the word “prohibition,” the regulator assesses how such behavior affects the market structure: whether it strengthens a dominant position, restricts competitors’ opportunities, or influences consumer choice.

The situation becomes particularly sensitive when a manufacturer directly or indirectly restricts partners from reselling goods to IEs or other parties selling products through online platforms. Such restrictions are already in the focus of the APDC.

Examples from practice support this. For example, car dealers in Kazakhstan were found to have violated antitrust laws by imposing additional services and products on clients when purchasing cars. Although this appeared to be a voluntary choice, the client essentially had no alternative. A similar logic is applied when a retailer is “recommended” not to sell to certain IEs, especially if this is followed by economic penalties or incentives.

Out-of-stock: legitimate reason or a means of restricting competition?

Manufacturers often explain limited assortment availability by citing a lack of inventory. This is one of the most common arguments for offering a restricted range of products to a specific distributor. However, even this seemingly objective reason may be viewed by the antitrust authority as an indirect mechanism of limiting access to goods — especially if “shortages” systematically affect the same buyers or channels. It is important to understand that under Article 170 of the Entrepreneurial Code of the Republic of Kazakhstan, actions by a market entity in a dominant position are prohibited if they lead to a restriction of competition, including the creation of discriminatory conditions for certain counterparties.

In practice, the APDC analyzes such cases not only by formal declarations of “availability/unavailability” of goods but also by the recurrence and economic rationale behind such instances. In the absence of documented reasons (such as supply disruptions, force majeure, regional distribution principles, or quotas), the risk of the behavior being classified as anticompetitive increases. A manufacturer should either ensure a transparent, justified system for distributing limited inventory or explain why some partners received access to the goods while others did not.

Increased focus of the APDC on marketplaces

The regulator is paying growing attention to online markets. In 2024–2025, the APDC initiated a study on Kazakhstani marketplaces to assess the level of competition and potential access restrictions for independent sellers. This indicates a trend: the regulator has started to examine vertical supply terms not only in offline but also in digital environments. It is essential to understand that the law does not prohibit either assortment limitation or the establishment of an authorized distribution network. However, if these measures result in market exclusion of participants, limit consumer choice, or are accompanied by conditions that affect a counter-party’s freedom, they may be considered anticompetitive.

Recommendations

A manufacturer seeking to build a controlled sales model must adhere to certain principles. Product range restrictions should be objectively justified: by logistics, regional specifics, or purchase volumes. Resale conditions should not be prohibitive and should not be backed by penalties or bonuses. It is beneficial to structure distribution models through recommendations rather than obligations — while also monitoring how contractual terms are applied in practice. The regulator evaluates the actual market impact, not merely the legal wording.

Antitrust oversight in Kazakhstan is becoming increasingly substantive and focused on real mechanisms of influence. The larger the organization, the higher the expectations for transparency and legal integrity in its distribution policy. A manufacturer should approach issues of assortment or sales channel restrictions as an antitrust strategist — with an understanding of the permissible boundaries.

If you are facing issues related to antitrust regulation, Rödl & Partner specialists provide professional support at every stage — from risk analysis to audit supervision. We assist companies in building a competitive yet legally secure model of distribution and cooperation.