Vertical agreements - Block exemption

Question 1

Scope of the VBER

Answer 1

Starting point –> exemption, whenever the VBER’s criteria are satisfied and the specific carve-outs do not apply.
- Only applies to vertical agreements where each party operates at different levels of the distribution chain in terms of the agreement/restriction in question.
- If competitors the exemption will not apply
- It excludes agreements entered into with end-customers.
- Finally, the agreement must concern sale of goods/services.

Association of retailers –> All members must be retailers and no idividual member can have a yearly turnover in excess of EUR 50m

If agreement is covered by another block exemption
- VBER will not cover such an agreement, even if the criterias of the other exemption are not met

Question 2

Intellectual property rights

Answer 2

Cannot be the main purpose of the agreement, must be ancillary to the agreement
- The primary object must be the purchase, sell or resell goods or services, fx exclusive distribution or franchise

There must be a vertical agreement
- The parties must purchase, sell or resell goods or services
- If purely know-how license, might be caught by the block exemption for technology transer agreements instead

IPR provisions must be for the use of the buyer
- Must be a transfer from the supplier to the buyer, not the other way around

Question 3

Dual distribution

Answer 3

Supplier sells goods or services not only at the upstream level but also at the downstream level, thereby competing with its independent distributors.
- Agreements between competing undertakings

Covered by the VBER on the condition, that the agreement does not contain any hardcore restrictions, and provided that the buyer does not compete with the supplier at the upstream level.

Mix of vertical and horisontal level –> Only one on the upstream market, but both are present on the downstream market

Question 4

Market share thresholds

Answer 4

Each of the parties may not have a market share that exceed 30 %
- The supplier (seller) has a market below 30% on the upstream sales/supply market
- The buyer has a market share below 30% on the purchasing market downstream
- Remember dual distribution, the distributors market shares are added together and have to be below 30 %

Exceeding the market share threshold
- No presumption of a restriction of competition simply because market share thresholds are not met.
- An individual assessment will however be necessary.

Question 5

Hard-core restrictions

Answer 5

Resale price maintenance
- Hard-core restriction if fixed price or minimum price
- Recommended prices and maksimum prices are as a starting point legal

Territorial and customer restrictions
- Concerned with the buyers right to sell
- UP –> Territorial and customr restrictions are regarded as hard-core restrictions
- U1 –> Allowed to restrict active sale if exclusive distribution (restrict passive sale is illegal)
- U2 –> Allowed to restrict active and passive sale, to keep the wholesaler from selling to the end-user (only retailer selling to end-users)
- U3 –> Allowed to restrict active an passive sale to unauthorized distributors in selective distribution system
- U4 –> Allowed to restrict active and passive sales for a buyer of components for use
- Combination of selective and exclusive distribution –> only allowed if no restriction of active or passive sales

Internet sales
- Considered to be passive sale
- Completely restrict the use of the internt to sell –> Hard-core
- Restrict the use of intermediaries (third party platforms) –> Not hard-core
- Price comparison –> not allowed to restrict, since it is a place of knowledge, not of selling

Question 6

Non-exempted provisions

Answer 6

The individual provision will not benefit from the block exemption, but the rest of the agreement will

Non-compete obligation
- Excluded if the duration is beyond 5 years
- If the products or services are sold from premises or land owned by supplier, without time limit
- Includes obligations to buy more than 80%

Non-compete obligations that continues to be in effect post-termination
- Limited possibility for post-termination clause with a duration of 1 year post-term if the clause is necessary for protection of know-how

Specific non-compete obligations within a selective distribution system
- Not allowed to use selctive distribution as a sort of boycott of only some competing products