Antitrust law: The most important changes of the new vertical BER
The transition period is running: On 1 June 2022, the amendments to the Block Exemption Regulation for Vertical Agreements (BER) and the Supplementary Vertical Guidelines (VLL) entered into force. For existing contracts, the new rules provide for a transition period of one year. Therefore, companies should review their distribution agreements now. In my article, I present essential changes.
When do vertical agreements serve competition?
The Block Exemption Regulation (BER) issued by the EU Commission regulates cooperation between manufacturers and distributors as well as between other suppliers and buyers. It specifies the conditions under which vertical agreements serve competition and are exempt from the non-compete obligation and the constellations in which this is excluded. Generally speaking, the basic principle remains the same. Vertical agreements are exempted from the ban on cartels under certain conditions, i.e. they are "block exempted".
The main cornerstones are:
30 percent market share: Neither the market share of the supplier on the sales market nor the market share of the buyer on the demand market may exceed 30 percent.
No hardcore restrictions: In particular, no restrictions on prices, territories or customers may be agreed.
No grey clauses: Unlike hardcore restrictions, grey clauses in agreements are severable. Although they cannot be exempted, the exemption of the remaining part of the agreement remains in place. Grey clauses include, for example, indefinite or excessively long non-competition clauses.
Dual distribution
Vertical agreements are no longer possible only between manufacturers and distributors, but also between wholesalers and downstream distributors. The exchange of information between these partners is exempted if it directly concerns the implementation of the vertical agreement or is necessary to improve production or distribution. There can be no coordination on pricing or sales at the distribution level.
Vertical price maintenance
There are some important clarifications regarding vertical price maintenance:
Price monitoring in electronic commerce will not be considered as vertical price maintenance if no accompanying measures are derived from it.
If a supplier prohibits the dealer from advertising below a specified minimum price, this may constitute RPM.
Performance contracts remain permitted under certain conditions. With fulfilment contracts, a distributor executes a prior agreement between a supplier and a specific end-user. As long as the supplier selects the fulfilling company, the supplier is allowed to set the retail selling price. This includes an online platform operated by independent retailers under one brand. As long as the platform operator selects the retailer, it may also set the retail price. However, if the end consumer selects the company, the supplier is not allowed to set the price.
Online platforms and distribution
The BER considers online platforms and marketplaces as suppliers. This means that the commercial agent privilege does not apply to these platforms. This also applies to hybrid platforms, for example online shops that not only offer their own goods but also enable third-party traders to sell their goods.
Online and offline sales are no longer regarded as equivalent. Suppliers can specify different quality requirements for stationary sales and for sales via the Internet. Providers thus have the possibility to set different prices for online and stationary sales within certain limits. This is permissible if the pricing creates an incentive for appropriate investments and the difference is in proportion to the costs of the distribution channels.
Best price clauses of online platforms are excluded from the exemption. Platform operators may therefore not prohibit providers from making more favourable offers to end consumers on other platforms.
Traders are allowed to use price comparison portals. They may not be generally prohibited from doing so by their suppliers. It is only prohibited to use such portals if certain territories are reserved exclusively for the dealer or other distributors when selling (exclusive distribution system).
We advise companies on analysing the impact of the BER in their existing contracts with suppliers and distribution partners and help them to identify and contractually regulate the relevant changes.
Michaela Witzel, LL.M. (Fordham University School of Law),
Fachanwältin für IT-Recht
witzel@web-partner.de