Tag: VBER

European Commission confirms final texts for new EU rules for vertical agreements

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On 10 May, the European Commission (the ‘Commission’) published final texts of the new Vertical Agreements Block Exemption Regulation (‘VBER’) and the accompanying Guidelines on Vertical Restraints (‘Guidelines’).  These two documents set out the full legal framework for the assessment of vertical agreements under EU competition law that will apply from 1 June. 

Although the process leading up to this moment started back in 2018, this means that businesses and their advisers have been given only three weeks to digest the final texts before they come into force.  While the main changes that will come into force on 1 June are largely as previewed in the draft texts that were published for consultation back in July last year, there are some surprises.

To discover and be surprised, download a copy of our briefing.

The CMA’s draft VABEO Guidance Consultation

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Response of Euclid Law Ltd. to the Consultation on the CMA’s Draft Guidance on the Vertical Agreements Block Exemption Order 2022 (CMA154)

We welcome publication of the CMA’s draft guidance on the Vertical Agreements Block Exemption Order 2022 (‘VABEO’) (the ‘Draft Guidance’) and the opportunity to comment on it.

Given the shared heritage of the VABEO and the EU Vertical Agreements Block Exemption Regulation (‘VBER’), as well as the extensive precedent in which the VBER and related principles of EU law have been applied in a UK context, we agree with the CMA’s decision to “broadly reflect” the EU’s Vertical Guidelines (the ‘EU Guidelines’) in the Draft Guidance.

While there are some instances where the application of principles developed with the EU’s single market in mind to a UK-specific context can come across as somewhat strained, we agree that prioritising consistency is the right approach at this time.

To read and download the full Response, click here.

Response to the additional Public Consultation on Proposed Guidance relating to Information Exchange in the context of Dual Distribution

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As part of the ongoing review of the Vertical Block Exemption Regulation and Guidelines, on 4 February 2022, DG COMP launched a two-week consultation regarding proposed guidance on information exchanges in dual distribution.  The proposed new section provides much needed clarity and valuable additional guidance on the circumstances in which information exchange in a dual distribution context will not raise concerns.  The Commission also appears to have dropped the proposed 10% market share threshold, which is very welcome as this will materially reduce complexity and uncertainty.   

Euclid Law’s response is available here. 

European Commission Evaluation of the Vertical Agreements Block Exemption Regulation (VBER)

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Response to the Public Consultation on the draft revised Regulation and Guidelines

Euclid Law Ltd.

1. Euclid Law Ltd. (Euclid Law) is a boutique competition law firm, with offices in London and

Brussels. We advise on all aspects of EU and UK competition law. Euclid Law is also a

founding coalition member of eControl GlobalTM, through which we work closely with US law

firm Vorys, Sater, Seymour and Pease. Our European eControl practice has a particular focus

on advising brands on the roll-out of selective distribution systems.

2. Our lawyers advise on the compatibility of distribution agreements with EU competition law

on a daily basis. We also have experience of representing clients in investigations of their

distribution arrangements by the European Commission (Commission) and National

Competition Authorities (NCAs). As well as advising a wide range of brands, from globally

established companies to start-ups, we have advised online retailers, marketplace operators,

brick and mortar retailers, software companies, sporting rights companies, financial services

companies, insurance companies, gaming companies and pharmaceutical companies on their

distribution arrangements.

3. We are submitting this paper from the position of practitioners who see merit in having a

rational, predictable and up to date competition law regime for vertical agreements. The views

stated are our own and do not necessarily represent the views of any client of our firm.

Download and read the full memo here.

Revised EU rules for vertical agreements unveiled

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by Becket McGrath & Loukia Kopitsa

On 9 July 2021, the European Commission (the ‘Commission’) published its draft texts for the new Vertical Agreements Block Exemption Regulation (‘VBER’) and Guidelines on Vertical Restraints (‘Guidelines’) for public consultation.  These are the result of an evaluation process, which started in 2018, of the current competition law rules for vertical agreements.  Those rules entered into force in January 2010 and are due to expire at the end of May 2022.

One area that has not changed is the attitude taken to price restrictions.  Despite intense lobbying, the new VBER retains the current approach in classifying resale price maintenance (‘RPM’)as a hardcore restriction of competition that is presumptively unlawful and can be justified only in exceptional circumstances.

The single key theme that emerges most strongly from the new texts is that the Commission agrees with those who have argued that the 2010 regime was unduly favourable to online retailers and marketplaces (principally Amazon).  While the 2010 changes were motivated by a desire to encourage online retail, as a means of developing the single market and improving consumer access to products on a cross-border basis, brands objected that the regime made it too difficult for brands to control online retail.  Should they be retained in the final texts, the proposed changes will make life harder and less certain for online retailers (especially those, such as Amazon, that operate third party marketplaces in parallel) and those doing business with them.  While some of the changes will be welcomed by brands, others introduce additional complexity and uncertainty that are likely to make it harder to apply the VBER in practice.  As a result, it cannot be said that, taken in the round, the new texts mark a distinct improvement on the 2010 regime.

Background

The VBER creates a safe harbour, known as a ‘block exemption’, which protects common forms of distribution agreements from legal challenge under Article 101 of the Treaty on the Functioning of the European Union (‘TFEU’), which prohibits anticompetitive agreements, and national equivalent rules.  In principle, any agreement between parties operating at different levels of the supply chain (for example, a brand and a distributor) can benefit from the block exemption, provided that the parties’ market shares do not exceed 30% of the relevant markets and the agreement does not contain any ‘hardcore’ restrictions of competition. 

Hardcore restrictions (e.g., RPM, absolute territorial protection, customer allocation), which are set out in Article 4 of the VBER, are presumed to be so harmful to competition that they render an entire agreement ineligible for protection and presumptively unlawful.  If an agreement contains a less serious ‘excluded restriction’, the specific restriction will be unenforceable, but the rest of the agreement will be protected.  

The Guidelines set out extensive guidance concerning application of the VBER and for assessing the legality of agreements outside of its protective scope.  Taken together, the VBER and Guidelines effectively create a code for the application of EU competition law (and, by extension, national competition laws) to vertical agreements.

Click here to download the full briefing and dive into the main changes of the revised Regulation.

EC Evaluation of the VBER – Euclid Law’s response to the Public Consultation

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As part of its ongoing assessment of the Vertical Block Exemption Regulation (VBER), the European Commission launched a public consultation questionnaire, which closed on 26 March 2021, to obtain specific feedback on various policy options. 

Euclid Law responded to the consultation, agreeing with the Commission’s overall evaluation that the VBER and Guidelines remain useful and relevant, but also agreeing that they need to be updated to take account of market and case law developments since 2010. 

To support the questionnaire response, Euclid Law prepared a separate paper focused on some of the specific points addressed by the Commission, which you can find here.

What Is Stopping Brands from Adopting Selective Distribution? Three Common Myths Dispelled

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by Becket McGrath

Selective distribution offers brands a ready-made and well established means of ensuring that their products are sold in a consistent and high-quality sales environment across Europe. It does so by limiting sales of a brand’s products to a network of resellers that meet its specified selective distribution criteria, with all others placed on the other side of the network’s protective moat. Resellers who commit to support a brand, for example through investment in point of sale materials, marketing spend, or staff training, are rewarded, while access to products by less committed retailers is cut off. As a result, the brand’s products are presented in the best light and competition between brands is enhanced.

Read Becket’s full ‘Brand Licensing’ article from Wolters Kluwer‘s October 2020 edition of The Licensing Journal here.

Signs of Commission’s Verticals Focus Emerge in VBER Evaluation Document

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by Becket McGrath, Sarah Long and Aakash Kumbhat

On 8 September 2020, the European Commission (‘the Commission’) published the results of its evaluation of the Vertical Block Exemption Regulation (‘VBER’) and associated guidelines in the form of a Staff Working Document. 

The 232 page document summarises evidence received by the Commission from businesses, their advisers, consumer bodies and national competition authorities (‘NCAs’) in response to its consultation on the operation of the current vertical agreements regime.  It also takes account of the findings of the Commission’s E-commerce sector inquiry, which ran from 2015 to 2017, and a detailed ‘evaluation support study’ that was conducted by external consultants.  Although the document is primarily concerned with pulling together the wide-ranging views received through this process, which has been running since 2018, it does contain some broad conclusions and an indication of its priorities for updating the verticals regime.

To read the full note, click here.

Retail MFNS and Online Platforms under EU Competition Law: a Practical Primer by Sarah Long

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As part of the September 2019 issue of Competition Policy International (CPI)’s Antitrust Chronicle, Sarah Long’s article explores retail MFNs in the context of online platforms and specifically the challenges faced by competition authorities in assessing the potential anti-competitive nature of such agreements.

An uncertainty exists, felt most keenly by businesses, as to the perceived absence of clear legal framework, and the lack of co-ordination between competition authorities in their approach to this issue. This article aims to provide a practical framework for the assessment of retail MFNs in the context of online platforms under EU competition law.

To learn more about retail MFNs in the context of online platforms, the application of the Vertical Block Exemption Regulation (“VBER”) to retail MFNs and assessing retail MFNs under Article 101 TFEU and Article 102 TFEU, please follow the link to download the article.