Post Brexit, the UK had retained the EU Vertical Agreements Block Exemption Regulation (VABER) until its expiry on 31 May 2022. The VABER is an EU mechanism to provide an automatic exemption from EU competition law for restrictions of competition in vertical agreements where certain conditions are met. In the EU, the VABER’s replacement will take effect from 1 June 2022. Following the CMA’s recommendation that there should be UK-specific legislation going forward, a draft UK Vertical Agreements Block Exemption Order (Order) has been published for consultation.

The Order will operate as per the VABER and will provide a UK safe harbour from the prohibition on anti-competitive agreements for vertical agreements in respect of the sale and purchase of goods and services between businesses at different levels of the supply chain. 

For businesses operating both in the UK and the EU, it will be important to ensure compliance with UK and EU competition law and to be alert to the differences arising from the two new set of rules from 1 June 2022. Whilst the UK’s proposed approach provides businesses with more flexibility in respect of combining exclusive and selective distribution and also in respect of dual pricing and selective distribution criteria to help create a more level playing field between online and bricks-and-mortar retailers, the UK is taking a stricter approach to the treatment of most favoured nation provisions. The draft Order provides for a oneyear transitional period for business to ensure compliance with the Order in relation to their existing agreements which comply with the current VABER.

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