European Commission Publishes Outcome of Evaluation of EU Competition Rules on Vertical Agreements

Kramer Levin Naftalis & Frankel LLP

On Sept. 8, 2020, the European Commission published its Staff Working Document summarizing the findings of the evaluation of the Vertical Block Exemption Regulation (VBER) applicable to vertical agreements and the VBER’s related guidelines, which are due to expire on May 31, 2022.

The purpose of the evaluation was to gather evidence on the functioning of this legislation in order to decide whether to renew the VBER in its current form, let it expire or revise it.

The evaluation demonstrated that the VBER and the guidelines on vertical restraints are still relevant, as they are useful tools that greatly facilitate the self-assessment of vertical agreements and help reduce compliance costs for companies entering into such agreements.

At the same time, the evaluation highlighted that the market has considerably changed since the adoption of the VBER, particularly due to the growth of online sales and new market players such as online platforms.

The evaluation has identified a number of problems and proposes amendments to simplify, clarify and update the VBER, such as:

  • Clarifying terms and definitions (e.g., agency contract) and providing more examples to help businesses self-assess.
  • Ensuring that the rules are clear in order to be uniformly interpreted by EU national competition authorities.
  • Simplifying certain provisions in order to reduce compliance costs for businesses, especially SMEs.
  • Updating the provisions to reflect the current business environment and distribution models, as well as the recent decision-making practices of EU institutions and courts.
  • Filling gaps in the provisions to cover the rapidly changing business environment due to the lack of guidance on how to assess retail price parity clauses or restrictions on the use of price comparison websites.
  • Reducing the burden on companies related to the analysis of the compatibility of their agreements with Article 101 of the Treaty on the Functioning of the European Union (TFEU). Specifically, compatibility could be achieved by exempting, in specific areas of the rules, additional vertical agreements for which stakeholders have indicated that they would normally fulfill the conditions of Article 101(3) of the TFEU.

In the coming weeks, the Commission will launch an impact assessment to examine the problems identified by the evaluation. A public consultation on the subject is also planned by the end of the year before the Commission publishes a draft revision next year.

Our Competition and Distribution team is at your disposal for any further information on this subject.

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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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