The Supreme Court has clarified that the exception to the duration of a non-compete as laid down in the (former) block exemption for vertical agreements should be interpreted according to national law.

In dispute was whether a non-compete with a 20-year duration concluded between energy company BP and the operator of a number of petrol stations could fall within the exception, according to which the five-year limit for non-compete obligations does not apply "where the contract goods or services are sold by the buyer from premises and land owned by the supplier or leased by the supplier from third parties not connected with the buyer ".

In the case at hand, the Province of Utrecht owned the land rented by the service operator, which subsequently sub-let it to BP to build petrol stations to be exploited by the service operator. BP argued that the exception was applicable because although it could not be regarded as the 'owner' from a legal point of view, it did have 'economic ownership' because it built the petrol stations.

The Supreme Court referred to EU case law according to which the concept of ownership in the block exemption is not a:

"concept of Community law which is independent of the law of the Member States. Given that, pursuant to Article 295 EC (now Article 345 TFEU), the Treaty in no way prejudices the rules in the Member States governing the system of property ownership, a Community regulation cannot be considered to use a concept of ownership different from those which exist in the Member States."

Since economic ownership does not qualify as ownership according to Dutch law, the Supreme Court ruled that the block exemption's exception does not apply where the supplier, from an economic point of view, has premises or land at its disposal because it rents it from the buyer or from a third party connected to the buyer. As a result, BP could not benefit from the exception.

For further information on this topic please contact Jolling De Pree or Erik H Pijnacker Hordijk at De Brauw Blackstone Westbroek by telephone (+31 70 328 53 28), fax (+31 70 328 53 25) or email ([email protected] or [email protected]).