New Competition Law Rules For Distribution Agreements - The New Vertical Block Exemption Regulation

• Published date: 06 June 2022
• Subject Matter: Anti-trust/Competition Law, Media, Telecoms, IT, Entertainment, Antitrust, EU Competition , Advertising, Marketing & Branding
• Law Firm: Dorda Rechtsanw'lte GmbH
• Author: Mr Heinrich Kühnert and Dr Veit 'hlberger, M.Jur.

New competition law rules for distribution agreements - the new Vertical Block Exemption Regulation

1. Introduction

After a long consultation period, the European Commission recently published the new Block Exemption Regulation for Vertical Agreements (Regulation (EU) 2022/720 "VBER"). The regulation will enter into force on 1 June 2022. New Guidelines on vertical restraints ("Guidelines") will accompany the new VBER. Both replace the previous set of rules from 2010. Agreements which comply with the old VBER will benefit from a transitional period until 31 May 2023 before compliance with the new VBER becomes mandatory in order to benefit from the exemption.

The Commission's aim in revising the rules was to bring them in line with new market developments, especially in the digital economy. Although the number of changes is limited, they have great practical relevance especially (but not only) for online and dual distribution.

2. Much remains unchanged

Like its predecessors, the VBER 2022 applies to vertical agreements. An agreement is vertical if, for the purposes of the agreement, the parties operate at different levels of the production or distribution chain and it concerns the conditions under which the parties purchase, sell or resell goods or services. In addition to distribution, authorised dealer and franchise agreements, this also includes, inter alia, purchase and supply agreements. Commercial agency contracts are also included, unless they are already exempt from the prohibition of anticompetitive agreements based on the exception for commercial agents.

The market share limit for the exemption also remains unchanged. As under the VBER 2010, the exemption is subject to the requirement that neither the market share of the supplier nor the share of demand of the buyer exceeds 30%. During the consultation phase, the Commission had considered introducing an additional combined market share threshold of 10% on the retail market for dual distribution settings. This additional threshold was widely criticised and ultimately did not become part of the new rules.

The general structure of the VBER also remains unchanged. Hardcore restrictions (also called "black clauses"), which lead to the agreement losing the benefit of the exemption, are listed in Art 4. As before, they include resale price maintenance, territorial and customer restrictions and restrictions on the sale of spare parts to independent repair or service companies. Art 5 VBER continues to list the so-called "grey clauses", including in particular non-competition obligations. Although grey clauses are not exempted, the exemption continues to apply to the rest of the contract. The new VBER brings about changes and clarifications to both black and grey clauses.

3. Significant changes brought about by the VBER 2022

3.1. Changes regarding dual distribution

While, contrary to the Commission's original proposal, no additional market...