Commission adopts revised Vertical Block Exemption Regulation and Vertical Guidelines
On 10 May, the European Commission adopted the revised Vertical Block Exemption Regulation and the accompanying Guidelines on Vertical Restraints. Below, we summarize the main changes to the VBER. Continue to follow updates from us, as we will publish a more extensive insights article on the revised VBER shortly.
The revised Vertical Block Exemption Regulation (VBER) and Guidelines on Vertical Restraints (Vertical Guidelines), which enter into force on 1 June 2022, replace the previous regime from 2010. The revised rules aim to help businesses to assess the compatibility of their supply and distribution agreements with EU competition rules in a business environment reshaped by the significant growth of e-commerce and online sales. The main changes to the previous rules focus on adjusting the safe harbors and introducing specific rules and guidance regarding the assessment of online restrictions.
The revised VBER takes a stricter approach to the safe harbors for dual distribution and parity obligations.
- The block exemption for dual distribution, i.e., the practice whereby a supplier sells its goods or services both through independent distributors and directly to end customers, e.g., through its own website, no longer covers information exchange between the supplier and the buyer that is either not directly related to the implementation of the vertical agreement or is not necessary to improve the production or distribution of the contract goods or services.
- The block exemption for parity obligations no longer covers across-platform retail parity clauses. These are clauses imposed by online intermediation service providers that require a supplier not to offer the contract goods or services on better conditions via competing online intermediation services.
The revised VBER takes a more lenient approach to active sales restrictions and certain practices related to online sales.
- The revised VBER introduces the concept of “shared exclusivity”. This means that the supplier is allowed to restrict active sales by its other distributors into a territory or to a customer group allocated by the supplier to a maximum of five exclusive distributors. In addition, the supplier can require that such active sales restrictions be passed on to its other distributors’ direct customers.
- As regards online sales, the revised VBER enables a supplier to charge the same distributor different wholesale prices for products to be sold online and offline under certain conditions. In addition, in the context of selective distribution systems, a supplier is allowed to impose different qualitative criteria for online and offline sales under certain conditions. Both practices were considered as hardcore restrictions under the previous regime.
Further, regarding online sales, the revised VBER defines the prevention of the effective use of the internet by the buyer or its customers to sell the contract goods or services as a “hardcore restriction”. The Vertical Guidelines provide more detailed guidance on the assessment of various online sales restrictions.
This guidance, among other issues, will be described in more detail in our upcoming insights article.