Spring-cleaning: time for a fresh look at the EU competition rules on vertical agreements?

The European Commission is reviewing the effectiveness and relevance of EU competition rules on supply agreements, namely the Vertical Block Exemption Regulation (VBER) (and accompanying Vertical Guidelines).  The European Commission has now published a Report that finds that the current rules are important for legal and business certainty, but are out of touch with market realities, including the emergence of online platforms.  Consequently, their “relevance and effectiveness has been gradually decreasing”.  

The European Commission is reviewing the future of the VBER because it is due to expire in May 2022.  As part of this review, it commissioned studies to evaluate whether the current rules are effective, relevant and aligned with other EU legislation. These studies – as summarised in the Report – find that:

• The VBER is still relevant for vertical agreements.  The VBER provides much-needed legal certainty.  Without these rules, companies would face reduced efficiency due to increased legal and socio-economic costs.
• Business models and consumer behaviour have evolved since the VBER was published.  Online platforms are important distribution channels and often consumers’ first port of call.  But despite the prominence of e-commerce and online platforms, the VBER and Vertical Guidelines provide no clear rules around online sales.
• Price restrictions, selective distribution, exclusive distribution and price parity clauses have been closely scrutinised by national competition authorities (NCAs) and courts over the past 10 years.  The Report looks at whether the rules need to evolve in their treatment of these practices.  For example, there is support for continued block exemption of selective distribution rules.  The situation for price parity clauses is less clear.  NCAs have treated these clauses inconsistently so there is a clear need for EU-wide guidance.  But the studies suggest that the effects of price parity clauses are market-dependent (consistent with the findings in the European Commission’s Digital Policy report), so case-by-case analysis may still be needed.  As regards resale price maintenance, the Report suggests that the Vertical Guidelines lack clarity about when this harms competition or is pro-competitive.

The Report provides insight into the direction of travel of the European Commission’s review.  It’s looking likely that the VBER and Vertical Guidelines are here to stay, but there seems to be appetite for a revamp so that the rules reflect the growing online economy.