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May 16, 2022
Following a review and evaluation of the Vertical Block Exemption Regulation (330/2010/EU), the Commission has now adopted a new Vertical Block Exemption Regulation (VBER), together with new Vertical Guidelines. The new VBER and Guidelines will come into force on 1 June 2022.
The Commission says that the revised rules provide businesses with simpler, clearer and up to date- rules and guidance, which will help them assess the compatibility of their supply and distribution agreements with EU competition rules in the digital environment.
The VBER sets out exemptions from the prohibition in Article 101(1) of the Treaty on the Functioning of the European Union for agreements between companies that are active at different levels of the production or distribution chain, subject to conditions. The rules therefore provide for a safe harbour where certain agreements are block exempted.
The main changes to the previous rules focus on adjusting the safe harbour to ensure that it is neither too generous nor too narrow. The new rules:
- narrow the scope of the safe harbour as regards: (i) dual distribution, i.e., where a supplier sells its goods or services through independent distributors but also directly to end customers; and (ii) parity obligations, i.e. obligations which require a seller to offer the same or better conditions to its counterparty as those offered on third-party sales channels, such as other platforms, and/or on the seller’s direct sales channels, such as its website; therefore, certain aspects of dual distribution and certain types of parity obligations will no longer be exempted under the new VBER but must instead be assessed individually under Article 101 TFEU; and
- enlarge the scope of the safe harbour as regards: (i) certain restrictions on a buyer’s ability to actively approach individual customers, i.e. active sales; and (ii) certain practices relating to online sales, namely the ability to charge the same distributor different wholesale prices for products to be sold online and offline and the ability to impose different criteria for online and offline sales in selective distribution systems; these restrictions are now exempted under the new VBER, provided all other conditions for the exemption are met.
The Commission says that the revised VBER rules have also been clarified and simplified to make them more accessible to those who use them day-to-day. In particular, the VBER rules have been updated in relation to the assessment of: (i) online restrictions; (ii) vertical agreements in the platform economy; and (iii) agreements that pursue sustainability objectives. Further, the Guidelines provide detailed guidance on various topics, such as selective and exclusive distribution and agency agreements. To read the Commission’s press release in full and for access to all relevant documents, click here.