Commissioner designate for Competition, Joaquín Almunia, stated during his recent hearing before the European Parliament, that he intends to adopt a reviewed Vertical Block Exemption Regulation (“vBER”) before the end of May 2010. The vBER provides the competition law framework for distribution agreements. The current vBER will expire on 31 May 2010. The European Commission will further issue amended Guidelines that will contain important interpretive points on the provisions of the vBER.

A first Commission draft was published in July 2009 and was put to public consultation, attracting more than 150 contributions from stakeholders ranging from businesses to national authorities. The most important amendments to the current vBER address the issues of buyer power and online sales, in particular within exclusive and selective distribution systems.

Regarding online sales, the draft vBER Guidelines introduce language on restrictions that suppliers can impose on retailers. While suppliers using a selective distribution system could require a physical point of sale before allowing a retailer to sell online, any requirements that would further restrict online sales would be prohibited.

In order to qualify for an automatic exemption under the old regime only the supplier’s market share had to be lower than 30%. In the draft, this pre-condition equally applies to the buyer’s market share, which will require re-assessment of a number of agreements.

Several other amendments have been made, whose impact on businesses will require additional analysis. As the drafting and discussions between the European Commission and National Competition Authorities continue, the draft Regulation and Guidelines might still undergo changes.

Although a transition period is likely, businesses should review early their distribution agreements and, if necessary, adapt these to the new set of rules.