In search of certainty – EU to update competition rules on supply agreements

On 8 September, the European Commission published its final working document evaluating the EU competition rules on supply agreements, namely the Vertical Block Exemption Regulation (VBER) and accompanying Vertical Guidelines.

Echoing its earlier report on the same topic, the European Commission has found that “the market has changed significantly since the adoption of the VBER and the Vertical Guidelines, in particular due to the growth of online sales and of new market players such as online platforms.” Particular issues identified with the VBER and Vertical Guidelines include:

• Some provisions lack clarity, are difficult to apply, fail to reflect the digital economy or fail to reflect case law. The working document identifies particular concerns over the lack of guidance on how to assess retail parity clauses and restrictions on the use of price comparison websites, along with a need for a broader update to reflect recent case law – in particular the Coty judgement on online selective distribution.
• National Competition Agencies (NCAs) and courts interpret the rules inconsistently. The evaluation finds that diverging interpretations of the rules by NCAs and national courts may undermine legal certainty, indicating clearer guidance in the VBER and Vertical Guidelines is required. Examples of where there is no consistent NCA practice include on application of agency rules in an online context, the treatment of online platform bans, and dual pricing. 
• There could be scope for amendments to the types of agreement exempted by the VBER. Overall, the evaluation concludes that the list of practices that do not benefit from the VBER (known as 'hardcore restrictions') and exempted agreements are broadly appropriate. However, the Commission has indicated it will give further consideration to whether amendments to the conditions for exemption set out in the VBER are necessary.

The Commission has indicated it will launch an impact assessment on the findings by the end of the year, with a draft of the revised rules to be published during 2021 for stakeholder comment. The Commission intends to update the rules by 31 May 2022, the date the current rules expire.