European Commission to update supply agreement rules for digital era

The European Commission has published its draft updated rules on supply agreements, namely the Vertical Block Exemption Regulation (VBER) and the accompanying Vertical Guidelines.

In September, the Commission found that the market had changed significantly since the adoption of the VBER and Vertical Guidelines, most notably with the rapid growth of online markets.

The draft updated rules seek to:

• Adjust the scope of the VBER safe harbour - The draft rules exclude some arrangements which have been exempted until now, but which have become more prevalent with the rise of online sales and can no longer safely be assumed to be efficiency-enhancing - specifically, certain instances of dual distribution and "most favoured nation" clauses. Amongst the instances of dual distribution which are excluded are those involving "hybrid" online intermediation providers, who sell goods or services in competition with those who use their platforms. Conversely, the draft rules also include within the safe harbour certain arrangements which have not previously been exempt - namely, certain active sales restrictions and indirect measures restricting online sales. 
• Provide up-to-date guidance on online sales and advertising restrictions, and ensure a harmonised approach across the EU - Amongst other things the draft rules incorporate the principles on online sales bans which were established by the Court of Justice of the European Union in Pierre Fabre and Coty. They also explain why undertakings active in the online platform economy cannot qualify as genuine agents - a question which has given rise to considerable debate.
• Reduce compliance costs by simplifying the existing rules and guidance - Certain aspects of the existing rules are complex and give rise to challenges for businesses seeking to implement them. Amongst the rules which the draft claims to simplify are those on market sharing, which stakeholders are said to have found particularly complicated - although whether the new rules on these issues are any less complicated is a point for debate.

The Commission now invites comments from all interested parties by 17 September 2021, and plans for the rules to come into force on June 2022.