Overview
The European Commission has taken a significant step toward the revision of the Vertical Block Exemption Regulation (VBER) and the Vertical Guidelines. With its evaluation phase ending, the Commission has recently presented detailed findings, outlining what works and what may need to be updated after more than a decade. In our webinar, we unpacked the evolution of the Commission’s policy and explored the steps businesses can take now to prepare to navigate the revision process.
View the full webinar here.
In Depth
THE RULES WORK BUT REQUIRE ADAPTATION
- The current rules remain relevant and useful, but require updating. The current VBER—set to expire in Q2 2022—and the accompanying Verticals Guidelines remain useful tools for businesses. The rules need to be adapted, however, to remain fit for an increasingly digital world that is changing at a fast pace.
- Plans to clarify and simplify the rules and fill in any gaps. The European Commission is looking to clarify and simplify the rules. This includes incorporating recent case law on the substantive conditions of Article 101(3) and filling in gaps in the rules that may otherwise lead to divergent interpretation—restrictions on the use of price comparison websites and online advertising restrictions are cases in point.
- Plans to improve clarity on perennial issues, including resale price maintenance (RPM) and non-competes. The Commission may engage with businesses to discuss when countervailing efficiencies for RPM can be claimed, and the evidence required to satisfy the conditions of Article 101(3). Tacitly renewable non-compete obligations may also benefit from the VBER, provided the buyer can periodically terminate or renegotiate.
POSSIBLE REVISION OF THE CURRENT RULES IN CERTAIN AREAS
- Dual distribution. Dual distribution is generally covered by the VBER, but this may change. The scope of the exception may be limited to scenarios that are unlikely to raise horizontal concerns. Alternatively, the benefit of the VBER may be removed altogether.
- Active sales restrictions. The exceptions for active sales restrictions may be expanded to give suppliers more flexibility to design their distribution systems according to their needs. Restrictions on sales from outside a territory in which a selective distribution system is operated to unauthorized distributors inside that territory may also be permitted.
- Indirect measures restricting online sales. Charging the same distributor a higher wholesale price for products intended to be sold online than for products sold offline and imposing criteria for online sales that are not overall equivalent to those imposed on brick-and-mortar shops in a selective distribution system may no longer be considered hardcore restrictions.
- Most favoured nation (MFN)/parity obligations. MFNs/parity obligations may no longer benefit from the VBER, thus requiring an individual effects-based assessment of such clauses. Alternatively, certain efficiency-enhancing MFNs/parity obligations may continue to fall within the VBER.
IMPACT FOR BUSINESS
- Early assessment and preparation can prevent business disruption. Companies will need to reassess whether the VBER will still apply. The new rules will have an impact on the way companies do business and the costs of compliance could increase with the introduction of the new VBER. Early assessment and preparation will smoothen the transition to the new rules.
HAVE YOUR SAY
- The voice of business has already informed the Commission’s policy direction, and can still steer its thinking. Companies affected by the VBER revision can still make their views known, and can still set out their positions for or against certain options proposed by the Commission. Spontaneous submissions by businesses can be made at any time until the new rules take effect in June 2022.
