On June 1, 2022, the new European Vertical Block Exemption Regulation (Vertical BER) came into force. Companies must prepare for some innovations and changes in distribution law.
The new Vertical Block Exemption Regulation (Vertical BER) came into force on June 1, 2022, along with the new Vertical Guidelines. It regulates when competition restrictions are allowed or prohibited. This particularly affects distribution agreements, explains the commercial law firm MTR Legal.
According to Article 101(1) TFEU (Treaty on the Functioning of the European Union), agreements are prohibited if they lead to noticeable impairments or prevention of competition. According to the Vertical BER, agreements between companies at different levels of the production and distribution chain are exempt from this prohibition under certain conditions. This includes vertical agreements between producers and distributors. Essentially, this remains unchanged.
The condition for this is that neither the supplier nor the buyer exceeds the market share threshold of 30 percent and no serious competition restrictions exist. The so-called core restrictions of vertical price fixing and territorial and customer group restrictions remain.
Changes occur in dual distribution when the manufacturer sells its products not only through distributors but also directly to the end customer. Here, an exemption is only possible if the exchange of information directly pertains to the implementation of the vertical agreement or is necessary for the improvement of production or distribution. Thus, certain aspects of dual distribution will no longer be exempt.
Another change concerns the so-called parity obligations. This involves the seller committing to offer its contract partners conditions that correspond to the conditions of third-party distribution channels, e.g., other platforms, or the conditions of the seller’s direct sales channels, e.g., their own websites. Here too, certain aspects, according to the new Vertical BER, are no longer exempt and must be reviewed on a case-by-case basis according to Article 101 TFEU.
On the other hand, certain restrictions are reduced. This affects, for example, the buyer’s ability to actively approach individual customers or certain points in online sales.
Additional points of the new Vertical BER concern aspects such as non-compete obligations, sustainability, or the commercial agent privilege.
Manufacturers and distributors should adapt to the new regulations to avoid fines. Lawyers experienced in distribution law provide advice.
