“Commercial agreements are a key element between parties making business, mainly suppliers and distributors which should comply with EU competition rules. At the European level, these vertical relationships between a supplier and a distributor are governed by a Vertical Block Exemption Regulation since 1999 the aim of which is ‘to improve economic efficiency within a chain of production or distribution by facilitating coordination between the participating undertakings” (the VBER”). This Regulation and its related Guidelines are under review in order to take into account, at least, the new developments of distribution such as on-line sales or on-line platforms with a view to having the rules revised by 31 May 2022.
Last month, the EU Commission published its Staff Working Document Evaluation, summarizing the results of the evaluation process of the current VBER.
This study gathered from various sources (NCAs, national courts, manufacturers, brand owners, distributors, online platforms, retailers, other parties to vertical agreements and consumers) highlights qualitative and quantitative evidence on the effectiveness, efficiency and relevance of the VBER and the Vertical Guidelines. The document confirms the need for such rules and guidelines to allow companies to carry out a self-assessment of whether their agreements are compliant with EU competition rules. However, improvements are required and the study identifies provisions which may no longer be up to date with the latest market developments and business practices, and/or overlap with other provisions or give rise to possible inconsistencies across Member states. It should also provide more clarity legal certainty for stakeholders and a common legal framework for national competition authorities and national courts to avoid divergent enforcement.
The next guidelines should provide more clarity on resale price maintenance (RPM), agency, non-compete clauses, franchising or combination of distribution models as well as further guidance on active and passive sales, on-line sales and advertising restrictions, retail parity clauses, free riding, increasing selective distribution among others in order to be better adapted to the current business environment that do not fit into traditional supply and distribution. All these issues are of concern for parties to a commercial agreement who need clarity and certainty.
The EU Commission should launch shortly the “impact assessment” phase, that will be concluded with the publication of a draft of the new Regulation and Guidelines next year (2021) and plans to publish revised draft rules during next year”.