News

May 2010

New EEC Block Exemption for Vertical Agreements

On 20 April 2010, the European Commission published its new block exemption for vertical agreements which will come into force on 1 June 2010.

The block exemption applies to distribution agreements and franchise agreements.

Changes include:

• The 30% market share threshold will in future apply to all parties to the agreement, i.e. typically both the supplier and the buyer or the franchisor and the franchisee. By including this additional market share threshold for the buyer or the franchisee, the Commission has taken into account that some buyers on their own may have market power which potentially has a negative effect on competition. Fewer agreements will therefore benefit directly from the block exemption.

• Resale price maintenance will continue to be treated as a “hardcore” restriction, but the Commission accepts in its guidelines that in some cases resale price maintenance may lead to efficiencies.

• Sales over the internet are in most instances categorised as permissible passive sales, which cannot be restricted, irrespective of the language used on the website. The guidelines have become much more explicit about online sales, making it clear that it would be an illegal restriction of passive sales to introduce automatic re-routing of customers to the manufacturer’s or another distributor’s website or to provide for termination of purchases if credit card data reveal that the customer is based outside the distributor’s or franchisee’s territory.

• Fees paid by distributors to obtain access to a supplier’s distribution network may, in many cases, be covered by the block exemption, subject to the market share thresholds. This is a new category of agreements that are explicitly described as within the scope of the block exemption.

• Agreements where a supplier takes responsibility for marketing a particular category of products sold by the distributor (including products of competing suppliers) will be covered by the block exemption, subject to the market share thresholds. This is a new category of agreements which now qualify and is particularly important in the food and beverage sector.

Please note that this information is provided for general knowledge only and therefore specific advice should be sought for individual cases.

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