New vertical block exemption regulation
On 1 June 2022, Commission Regulation (EU) 2022/720 of 10 May 2022 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to categories of vertical agreements and concerted practices (the “VBER” or the “Regulation”) entered into force. It replaced Commission Regulation (EU) 330/2010.
The VBER lays down rules for applying EU competition rules to cooperation between suppliers and customers, especially as regards distribution. The VBER is accompanied by new Guidelines on Vertical Restraints (the “Guidelines”).
In particular, the Commission’s reforms aim to amend the scope of the safe harbour and to update the rules on vertical agreements so as to better reflect the changing market and entrepreneurs’ needs in the coming decade.
The Commission noted an updating of the VBER’s provisions on assessing online restrictions, vertical agreements in the online platform economy and agreements to meet sustainable development objectives.
The updated Guidelines provide detailed guidance on a number of issues, such as selective and exclusive distribution and agency agreements.
In principle, the reforms introduced by the Regulation should make it easier for entrepreneurs to assess whether their vertical agreements are compatible with Article 101 TFEU.
Main reforms implemented by the Regulation
The most important changes concern the new scope of the safe harbour. These can be broadly divided into two categories:
1. narrowing the scope of the safe harbour:
a) as regards dual distribution – i.e. situations where a supplier sells its goods or services to final customers both directly and via independent distributors;
b) as regards parity obligations – i.e. the duty for a seller to ensure that the terms and conditions it offers to its counterparties are the same or better than those offered via independent sales channels, such as other platforms, or its own direct sales channels, such as its own website.
This means that, under the new VBER, certain aspects of dual distribution and certain types of parity obligations will no longer be exempted and will require a case-by-case assessment to decide if they comply with Article 101 TFEU.
2. extending the scope of the safe harbour:
a) as regards certain restrictions on active contact between a buyer and individual customers – i.e. active sales;
b) as regards certain online sales practices – i.e. the ability to charge the same distributor different wholesale prices for products to be sold online and offline, and the ability to apply different criteria for online and offline sales in selective distribution systems.
Under the new VBER, these restrictions will be subject to exemption if all other conditions laid down in the VBER are also met.
Article 10 of the VBER states that the prohibition laid down in Article 101(1) TFEU shall not apply between 1 June 2022 and 31 May 2023 to agreements which were in force on 31 May 2022 and which do not satisfy the conditions for exemption stipulated in the new Regulation but which, on 31 May 2022, satisfied the conditions for exemption stipulated by Commission Regulation (EU) 330/2010. After this period, all agreements must be brought into line with the new Regulation and Guidelines.
Polish rules on vertical agreements
The Polish equivalent of the Regulation (i.e. the Regulation of the Council of Ministers of 30 March 2011 on excluding certain types of vertical agreements from the prohibition on restrictive agreements), also expires on 31 May 2023. Accordingly, it is expected that a new draft Regulation will be presented soon, to reflect the reforms introduced by the VBER.
As of 1 June 2022, all new vertical agreements, including distribution agreements, must comply with the new VBER. Additionally, entrepreneurs have until 31 May 2023 to bring their existing distribution agreements into line with the new Regulation and related reforms.
With this in mind, entrepreneurs should review and, if necessary, adapt their template vertical agreements, especially distribution agreements, to ensure that they are compatible with the Regulation’s new rules. They should also review/adapt any current agreements in force – this must all be completed by 31 May 2023.
The SSW Pragmatic Solutions team continuously monitors legislative reforms and draft laws that may affect your business. We will keep you informed of any further significant legal changes.