European Commission Revises Competition Rules for Supply and Distribution Agreements

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On April 20, 2010, the European Commission (“Commission”) adopted a new block exemption Regulation that revises existing EU competition law rules for certain categories of “vertical agreements” between manufacturers and distributors, including Internet or online distribution arrangements. The Commission also published new Guidelines that provide further insight into how it assesses the lawfulness of common restrictions in such agreements, including arrangements that fall outside of the Regulation’s safe harbour.

Firms doing business in the EU which are parties to new or existing supply and distribution agreements should carefully review the new Regulation and Guidelines. In particular, the new rules contain some changes that provide firms with greater flexibility to use certain restraints than existing regulations. Thus, continuing to use existing form agreements compatible with prior EU regulations may limit a firm’s ability to accomplish desired business objectives. In other areas, however, the revised rules provide greater clarity on the types of restrictions that the Commission will likely consider problematic under EU competition rules. Accordingly, some firms may wish to eliminate such restraints to minimize any potential risks.

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