Background
Dual distribution
Active sales, selective distribution and online distribution
Comment
On 10 May 2022, the European Commission adopted the new Vertical Block Exemption Regulation (VBER), along with the new Guidelines on Vertical Restraints (the guidelines), following an evaluation and review of the current rules. This revised VBER will enter into force on 1 June 2022.
The current VBER and its guidelines were adopted in April 2010 and will expire on 31 May 2022. Therefore, the VBER was subject to a review together with the 2010 Guidelines on Vertical Restraints (for further details please see "New draft vertical block exemption regulation under TFEU article 101(3)"). The purpose of the review was to allow the Commission to decide whether to:
- repeal the regulation;
- extend its duration; or
- revise it.
On 10 May 2022, this review ended and a revised VBER and revised guidelines were adopted. The revised VBER provides for a one-year transitional period until 31 May 2023.
The revised VBER and its guidelines provide simpler, clearer and more up-to-date rules and guidance to businesses. The new rules are designed to help assess the compatibility of supply and distribution agreements with EU competition rules in a business environment that has been transformed by the growth of e-commerce and online sales.
The VBER exempts agreements between companies operating at different levels of the production or distribution chain from the prohibition of article 101(1) of the Treaty on the Functioning of the European Union (TFEU) under certain conditions. The rules thus provide a safe harbour in which certain agreements are covered by the VBER. The changes to the previous VBER and its guidance have focused on adjusting the safe harbour scope to ensure that it is neither too generous nor too narrow.
Dual distribution is an important area of focus of the new VBER. In particular, the new rules narrow the scope of the safe harbour with respect to:
- dual distribution – where a manufacturer sells its goods or services through independent distributors but also directly to end customers; and
- parity obligations that require a seller to offer the same or better terms to its counterparty than on third-party distribution channels, such as other platforms, and/or on the manufacturer's direct distribution channels, such as its website.
Accordingly, certain aspects of dual distribution and certain types of parity obligations are no longer covered by the new VBER and must instead be assessed individually under article 101 of the TFEU.
Active sales, selective distribution and online distribution
The amendments to the VBER also broaden the scope of the exemption with respect to certain restrictions on a manufacturer's ability to actively approach individual customers (active sales) and certain practices related to online sales – namely, the ability to charge the same distributor different wholesale prices for products to be sold online and offline and the ability to set different criteria for online and offline sales in selective distribution systems. Such restrictions are now exempted under the new VBER, provided that all other conditions for exemption are met. In addition, the guidelines provide detailed guidance on selective and exclusive distribution, as well as agency agreements.
The adoption of the revised VBER and its guidelines has been received positively. In particular, the new set of rules and its guidance have been written in simpler and clearer language in order to avoid misunderstandings and to better address open questions on the correct interpretation of the rules. In addition, new elaborations and updates were made to the VBER and its guidelines with respect to:
- the assessment of restrictions in the online space;
- vertical agreements in the platform economy; and
- agreements that pursue sustainability objectives.
Additional detailed information on the main changes can be found in an explanatory note attached to the new rules.
For further information on this topic please contact Sebastian Jungermann at Arnecke Sibeth Dabelstein by telephone (+49 69 979885 465) or email ([email protected]). The Arnecke Sibeth Dabelstein website can be accessed at www.asd-law.com.