Vertical agreements are agreements between businesses operating at different levels of the supply chain. These agreements include agreements between manufacturers and wholesalers, wholesalers and retailers, and franchisors and franchisees. The EU Vertical Agreements Block Exemption Regulation aims to encourage competition by exempting certain types of vertical agreements from EU competition law.
The European Commission has recently updated its Vertical Agreements Block Exemption Guidelines, which explain how the Block Exemption Regulation applies to vertical agreements. The updated guidelines provide businesses with more clarity on how they can benefit from the exemption and avoid infringing EU competition law.
The updated guidelines provide businesses with more flexibility in selecting their distribution channels, allowing for a more efficient supply chain. However, the guidelines also highlight the need for businesses to avoid anti-competitive practices, such as resale price maintenance, territorial restrictions, and customer allocation.
The guidelines clarify that businesses can set minimum resale prices, but not maximum resale prices. This ensures that businesses can maintain a certain level of profitability without hindering competition from other retailers.
The guidelines also caution against imposing territorial or customer restrictions, as these can limit competition and lead to higher prices for consumers. The updated guidelines provide for more flexibility in determining the appropriate territory for each distributor, allowing for greater competition between retailers.
The updated guidelines also provide more clarity on the treatment of online sales. Businesses are allowed to restrict the use of online marketplaces like Amazon or eBay, but only if certain conditions are met. These conditions include setting objective quality criteria for the online marketplace, ensuring that the restrictions do not discriminate against certain retailers or customers, and providing a clear rationale for the restrictions.
In conclusion, the updated Vertical Agreements Block Exemption Guidelines provide businesses with more flexibility in designing their distribution channels while maintaining competition in the EU market. Businesses should review their existing agreements to ensure compliance with the updated guidelines and avoid infringing EU competition law.