On 20 April, the Commission is due to update the rules providing a ‘safe harbour’ for agreements between manufacturers and distributors – and other forms of so-called vertical agreements. The existing Vertical Restraints Block Exemption Regulation (VRBER) and accompanying Guidelines, which are 10 years old, expire at the end of May.
The novelties in the new texts are that they clarify the rules applicable to vertical agreements concerning on-line sales, recognising the development in the last decade of the Internet as a force for cross-border commerce and, second, that they extend the market share threshold to buyers, on top of a manufacturer’s threshold, above which the exemption does not apply. These updates of the rules reflect market dynamics, competition enforcement and economic research.
The current Block Exemption Regulation was adopted in 1999 and exempts supply and distribution agreements that comply with its provisions from the EU competition rules’ ban on restrictive business practices (Article 101(1) of the EU-Treaty). At the time of its adoption, the Regulation aimed at reducing the regulatory burden, in particular for companies without significant market power like small and medium sized companies (SMEs).
The Regulation and the accompanying Guidelines also introduced an effects-based approach to the assessment of vertical restraints. The overwhelming opinion is that the VRBER has been a success in reducing compliance costs and bureaucracy for all firms operating in Europe while ensuring consumers benefit from choice and price competition. The Commission published a draft of the new Regulation and Guidelines in July 2009 on which it received comments by trade associations, the legal community, the NCAs and many other interested parties a total of over 150 submissions.
A special website has been created for the review of the competition rules applicable to vertical agreements, including submissions made during public consultation.
