European Commission Adopts New Vertical Agreements Block Exemption Regulation And Guidelines

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INTRODUCTION

On April 20, 2010, following discussion and revisions during an intense public consultation period, the European Commission (EC) adopted its new Vertical Agreements Block Exemption Regulation1 and the accompanying Guidelines on Vertical Restraints,2 which will come into effect after the current regime expires on May 31, 2010, and apply for 12 years.

Generally speaking, the guidelines provide two main functions. First, they specify how the EC applies the block exemption, which provides a safe harbor for supplier and distribution agreements from the prohibition on restrictive agreements contained in Article 101(1) of the Treaty on the Functioning of the European Union, so long as the vertical agreements at issue meet certain criteria (mainly, a market-share threshold and the absence of certain “hardcore” restrictions in the agreement).3 Second, because agreements that do not fall under the safe harbor are not presumptively illegal, the guidelines offer guidance on how to assess when such agreements can run afoul of the competition laws.4 Due to the “hundreds of thousands,”5 if not more, of supplier and distribution agreements, the guidelines provide an important instrument and helpful direction for business firms. In addition, the EC believes that the new guidelines will have an important effect on consumers by

“ensur[ing] that consumers can buy goods and services at the best available prices wherever they are located in the EU. . . .”6

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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