New framework for vertical agreements

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As a result of an increase in online sales, many companies often do not know whether their supply and distribution agreements comply with EU competition rules. Below is an overview of current innovations that came into force on 1 June 2022 in the wake of the Vertical Block Exemption Regulation.

Under EU antitrust law, agreements between companies, decisions by associations of companies and concerted practices that may affect trade between Member States are prohibited. However, according to the Vertical Block Exemption Regulation (‘VBER’), vertical agreements, i.e. agreements between companies operating at different levels of the production and distribution chain, are exempted from this prohibition. The reason behind this is that certain vertical agreements can have a positive impact on economic efficiency within a production or distribution chain due to better coordination between companies.

The Commission has also issued supplementary guidelines on vertical restraints. In particular, the guidelines discuss principles for the assessment of vertical agreements and concerted practices.

This is a challenge at the moment, because the online boom in trade is also changing the business environment of companies accordingly. Therefore, we have listed the most important innovations in detail for you.

ONLINE PLATFORMS

Online intermediary services are now suppliers of goods, hence the VBER also covers agreements between online intermediary platforms and traders.
Wide-ranging parity obligations of online intermediary service providers are now exempted.
Hybrid platforms are exempt from the VBER.

DUAL DISTRIBUTION

The term‘supplier’is extended to wholesalers and importers.
An exchange of information that is not directly related to the implementation of the distribution agreement and/or is not necessary to improve production and distribution is no longer exempt.
There is an exemption for dual distribution only in case of a competitive relationship on the downstream market.

EXCLUSIVE DISTRIBUTION

Providers will now have the option of exclusively allocating a maximum of five customers to one territory.
In future, customer and territory restrictions will also extend across several delivery levels.
Providers can reserve a customer group or a territory for themselves if the latter have not yet been exclusively allocated to another provider.
In contrast to passive sales, suppliers may restrict the active sales of its buyers.

Selective distribution

The criteria applying to online sales no longer have to correspond to the regulations for physical sales.
There is a relaxation of the equivalence principle between offline and online sales of selective distribution systems, because online sales no longer need special protection as a result of their development.
A selective distribution system can be exempted, regardless of the type of product, the type of selection criteria or the publication.

ONLINE SALES

It is a hardcore restriction if it is aimed at preventing buyers from using the Internet for online sales.
Prohibiting the use of price comparison services or search engines is largely inadmissible because, according to the Commission, it restricts passive buying.
A ban of third-party platforms is in principle exempt regardless of the type of distribution system.
The same quality requirements between online and offline trade are not necessary, no equivalence requirement applies.
Dual pricing systems may be permitted if, for example, they stimulate investment in the respective territory.

EVERGREENING

In future, it will be permissible for non-competition clauses to be tacitly extended over a period of five years.

SUSTAINABILITY

The Green Deal is recognised as a priority objective. In addition, examples are given of how vertical agreements can be used to pursue sustainability goals.
The achievement of sustainability goals may justify an agreement’s exemption.

BALANCING ACT