European Commission publishes Staff Working Document on Vertical Block Exemption Regulation (VBER)

The Staff Working Document (SWD 2020 173 final) is the next step on the road to an updated VBER and corresponding guidelines. With the current VBER due to expire on 31 May 2022, the Staff Working Document (find it here on the Commission's website) marks the end of the evaluation phase and follows the publication of two Support Studies in May 2020. For further information, see our Law Now alert on the publication of the Support Studies.

The following article summarises the key contents of the Staff Working Document.

General findings

• The evaluation confirmed the need for a block exemption and corresponding guidelines, which stakeholders see as useful tools to facilitate the self-assessment of vertical agreements.
• However, the evaluation has also shown that the market has significantly changed since the adoption of the current VBER and guidelines. In particular, the growth of online sales and platforms has significantly impacted distribution models. At the same time, consumers expect to have a continuous omni-channel experience across a variety of different venues such as offline and online shops, marketplaces and other digital platforms. This has led suppliers to increase their various distribution and sales channels for their products and services.
• As a result, the current VBER and guidelines should be updated.

Issues to be addressed in the updated VBER and guidelines

• Issues identified during the evaluation, which are linked to the increased importance of online sales, include:
  • Online sales and advertising restrictions;
  • Dual pricing (offline and online);
  • Distinction between active and passive sales;
  • Selective distribution agreements;
  • Principle of online-offline equivalence;
  • Restrictions on the use of online marketplaces;
  • Restrictions on the use of price comparison websites;
  • Assessment of agency agreements;
  • Assessment of retail parity clauses; and
  • Rules on dual distribution (direct-indirect).
• Evergreen issues not necessarily linked to market developments include:
  • Resale price maintenance;
  • Non-compete clauses;
  • Franchising; and
  • Combination of different distribution models (e.g. exclusive and selective distribution by the same supplier).

Annex 4 of the Staff Working Document contains further details and specifics on the issues mentioned above.

Further findings of the evaluation

• There is a need for rules that are future-proof, containing bright-line principles that can cater to new types of vertical agreements and restrictions.
• Complexity of rules (e.g. exceptions to the exceptions in Article 4 of the VBER) has a negative impact on effectiveness and efficiency.
• There is a need to limit the ability of National Competition Authorities and national courts from taking divergent approaches, which work against a common framework and legal certainty across the EU.
• The catalogue of hardcore restrictions is generally appropriate. However, there might be the need to exempt additional vertical agreements.
• Stakeholders perceive a lack of coherence especially with the Geo-Blocking Regulation.

Roadmap to the evaluation of VBER and guidelines

The current VBER dates back to 20 April 2010 and the Vertical Guidelines were published on 19 May 2010. The VBER will expire on 31 May 2022, which is why the Commission initiated the evaluation process to check whether the VBER is still effective, efficient, relevant, value creating and in line with other EU legislation. During this process, the Commission did the following:

• started the evaluation with an initial-feedback period in late 2018;
• held a public consultation in early 2019;
• hosted a stakeholder workshop in November 2019;
• published Support Studies on 25 May 2020; and
• concluded the evaluation process with the Staff Working Document.

All contributions and documents concerning the evaluation process can be accessed on the Commission's website.

Next steps

• During the coming weeks, the Commission will launch an impact assessment to look into the policy options for a revision of the rules in order to address the issues identified during the evaluation.
• Stakeholders will have the chance to submit their views on the impact assessment in a further public consultation planned for the end of this year. A draft of the revised VBER and guidelines will be published for stakeholder comments in the course of 2021.

For more information on the draft VBER and guidelines, contact CMS experts Dr. Markus Schöner and Tobias Duhe or your regular CMS advisor.