by Becket McGrath
After a gestation period of almost four years, the new European Union (EU) block exemption regulation for vertical agreements (VBER) and the accompanying guidelines1 finally entered into force on 1 June 2022. At precisely the same moment, an entirely new United Kingdom (UK) verticals regime came into being, albeit UK practitioners had to wait a few more weeks until the accompanying guidance on that regime was published by the Competition and Markets Authority (CMA).
When the European Commission adopted the previous EU verticals block exemption regulation and guidelines2 on 20 April 2010, it set the competition law framework for vertical agreements in the EU for 12 years, up until that regulation’s expiry at midnight on 31 May 2022. At the time, that felt like a long way off. While the growing importance of e-commerce was already apparent in 2010, and was reflected in the 2010 Guidelines, the Commission could not have foreseen the extent to which the internet had come to dominate the retail sector a decade later. Although the move online was accelerated by the Covid pandemic, the intervening years have seen an enthusiastic adoption of e-commerce by European consumers, leading to substantial growth in the market presence of online retailers and marketplaces. This change in the market context raised the question of how far the basic architecture of the VBER regime needed to be revisited.
Questions that had received limited attention in the run-up to 2010, such as the impact of parity clauses and agency agreements in the online platform economy, thus became critically important in the intervening years, as a number of competition authorities sought to apply the VBER to such conduct.3 Possibly prompted by the proliferation of national cases, which did not always provide a positive example of the decentralised enforcement model,4 the Commission returned to the fray on vertical agreements, notably with its infringement decision against fashion brand Guess!.5 Inevitably, key questions concerning online sales restrictions percolated to the Court of Justice, leading to the milestone judgments in Pierre Fabre (which confirmed that an outright online sales ban amounts to a hardcore restriction on passive selling) and Coty (which confirmed that a ban on the use of third party marketplaces may fall outside of art.101 altogether and is in any event not a hardcore resale restriction, since it relates to how a product is sold, rather than where or to whom).6
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- Respectively, Commission Regulation 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 [2022] OJ L134/4 (the new VBER) and Commission Notice—Guidelines on Vertical Restraints [2022] OJ C248/1 of 30June 2022 (the new Guidelines), p.1.
- Respectively, Commission Regulation 330/2010/EU 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 [2010] OJ L102/1 (the 2010 VBER) and Commission Notice—Guidelines on Vertical Restraints [2010] OJ C130/1 of 19 May 2010 (the 2010 Guidelines), p.1.
- For example, the large number of parallel investigations into the use of parity clauses by hotel online booking sites, the German Bundeskartellamt and UK Office of Fair Trading (OFT) 2012 investigations of Amazon’s marketplace price parity policy, and the investigations by the Commission and OFT into the concerted introduction of an agency-based sales model for eBooks by Apple and certain publishers.
- The rash of investigations into the use of parity clauses by hotel online booking platforms in a large number of Member States, which in some instances produced divergent outcomes, may well have been the final straw.
- Decision of 17 December 2018 in Guess Case AT.40428 C(2018) 8455 final, available at: https://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=1_AT_40428.
- Respectively, Pierre Fabre Dermo-Cosmétique SAS v L’Autorité de la Concurrence (C-439/09) EU:C:2011:649; [2011] 5 C.M.L.R. 31 and Coty Germany GmbH v Parfümerie Akzente GmbH (C-230/16) EU:C:2017:941; [2018] 4 C.M.L.R. 9.
This material was first published by Thomson Reuters, trading as Sweet & Maxwell, 5 Canada Square, Canary Wharf, London, E14 5AQ, in (2023) 44 E.C.L.R., Issue 6 and is reproduced by agreement with the publishers. For further details, please see the publishers’ website.