The Vertical Agreements Block Exemption

Vertical agreements between the companies of opponents cannot benefit from the exemptions. In any event, since agreements signed between two undertakings are considered to be horizontal agreements, they do not fall within the scope of the communiqué. The Regulation provides for a block exemption from Article 101(1) of the Treaty on the Functioning of the European Union for vertical agreements* which meet certain requirements. Such agreements may, for example, help a manufacturer to open up a new market or prevent a distributor from `freely conducting` the advertising activities of another distributor or allowing a supplier to be able to amortize an investment made for a given customer. Until recently, the vast majority of case law on vertical restraints was at the level of national competition authorities and national courts. The Commission`s final report on the e-commerce sector inquiry was a turning point. Since its publication in May 2017, the Commission has again shown interest in vertical restraints and fined several companies in 2018 for restrictions on MPRs and cross-selling. It fined Nike and Guess, which limited cross-border sales in 2019. The Coty judgment of the Court of Justice of the European Communities (“ECJ”) also focused on the issue of the sale of online marketplaces, as the ECJ considered that a ban on platforms in a selective distribution system was permitted in certain circumstances.

These recent decisions show that vertical agreements are likely to continue to be a topic of interest, including at the level of EU authorities. It is therefore important to carry out an up-to-date assessment of the effectiveness, efficiency and relevance of the VBER and its guidelines, taking into account the digital developments that influence vertical relationships. Although the final report takes a first look at the likely merger, the Commission still needs to carry out a detailed impact assessment, which means that no new rules are expected before the expiry of the VBER in May 2022. Vertical agreements include distribution agreements (exclusive and selective), franchising, supply and agency agreements between non-competitors (i.e. those that do not compete in the market for the products covered by the agreement). The VABE provides that agreements between competitors can only benefit from the block exemption in very limited circumstances. The competition authority of a Member State may bring the benefit of this Regulation in accordance with Article 29(2) of Regulation (EC) No 1/2003 to the territory or part of that Member State if, in a given case, an agreement to which the exemption provided for in this Regulation applies nevertheless has effects in the territory of that Member State incompatible with Article 101, paragraph 3 of the Treaty – or in a part thereof, and if that area has all the characteristics of a distinct geographic market. . .

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