EU Commission Adopts New Vertical Block Exemption Regulation and Vertical Guidelines
European Commission adopted the new Vertical Block Exemption Regulation (“VBER”) accompanied by the New Vertical Guidelines on May 10, 2022. The new rules are simpler and clearer, which enables companies to assess the compatibility of their supply and distribution agreements to competition rules. In addition, it can be said that the growth of e-commerce and online sales has great effect on the amendments. The new amendments set forth by VBER can be briefly listed as follows:
Certain aspects of dual distribution will no longer be exempted under the new VBER. VBER excludes from the exemption information exchange that is either (i) not directly related to the implementation of the vertical agreement or (ii) is not necessary to improve the production or distribution of the contract goods or services.
In addition, vertical agreements of hybrid platforms are also excluded from the scope of the exemption.
Under the new rules, retail parity clauses imposed by platforms relating to the conditions offered on other platforms are also excluded. However, the new VBER still block exempts all other types of parity obligations.
Moreover, the new VBER includes changes to active sales restrictions. The possibility of shared exclusivity is introduced by allowing a supplier to appoint up to a maximum of 5 distributors per exclusive territory or customer group.
Furthermore, the VBER grants selective distribution systems enhanced protection.
Finally, the new Vertical Guidelines clarifies that suppliers may set different wholesale prices for online and offline sales made by the same distributor. While the difference in the wholesale prices must be reasonably related to differences in costs or investments, the parties are not required to carry out complex cost calculations or share detailed cost information in order to demonstrate this.
The revised VBER and Vertical Guidelines will enter into force on 1 June 2022.
You may find the full text of the VBER and Vertical Guidelines respectively here and here.
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