Sarwenaz Kiani of Mayer Brown outlines the new vertical agreement block exemption regimes in the EU and the UK, and their main points of diversion.

The main legal framework in the EU and in the UK governing distribution and supply agreements expired on 31 May 2022. On 10 May 2022, the European Commission (the Commission) adopted the revised framework, Regulation 2022/720/EU on the application of Article 101(3) of the Treaty on the Functioning of the European Union (TFEU) (Article 101(3)) to categories of vertical agreements and concerted practices (the Regulation), together with accompanying guidelines on vertical restraints (the Commission guidelines) (https://ec.europa.eu/competition-policy/system/files/2022-05/20220510_guidelines_vertical_restraints_art101_TFEU_.pdf).

In parallel, the UK adopted the Competition Act 1998 Vertical Agreements Block Exemption Order 2022 (SI 2022/516) (the Order), which is based on recommendations by the Competition and Markets Authority (CMA). The CMA issued draft guidance on the Order (draft CMA guidance) on 31 March 2022 (www.gov.uk/government/consultations/draft-vabeo-guidance). The Regulation and the Order both entered into force on 1 June 2022. They provide a one-year transitional period for agreements that were entered into before 1 June 2022 to be aligned with the new regimes. While the Regulation will apply for 12 years, the Order will apply for six years. The new regimes reflect developments in e-commerce and online platforms (see box “The path to reform”).

This article outlines:

  • The restrictive agreement prohibitions in the EU and the UK regimes, and individual and block exemptions to these prohibitions.
  • The new provisions in relation to online intermediation services and hybrid platforms.
  • The expanded guidance on what constitutes genuine agency agreements, which fall outside the scope of the restrictive agreement prohibitions.
  • Amendments to the safe harbour for dual distribution agreements. 
  • The additional flexibility for exclusive and selective distribution systems.
  • The new hardcore online restriction in the Regulation and guidance on qualitative online restrictions that benefit from the block exemption.
  • The narrowing of the scope of the safe harbour for parity obligations.

This article first appeared in the July 2022 issue of PLC Magazin.