Vertical Block Exemption Regulation (VBER) (VBER)
AI-assisted content notice: this page includes AI-assisted summaries, FAQs, and glossary entries prepared for navigation purposes. Verify the underlying legal text before relying on this content.
Summary
Commission Regulation (EU) 2022/720 (the Vertical Block Exemption Regulation, VBER) sets out the conditions under which certain vertical agreements and concerted practices are exempted from the prohibition in Article 101(1) TFEU. It replaces the previous VBER (Regulation (EU) No 330/2010) and is accompanied by updated Vertical Guidelines, reflecting developments such as e-commerce and online platform intermediation. The exemption generally applies where the parties' market shares do not exceed 30% and the agreement does not contain specified “hardcore” restrictions.
Who is affected?
It affects businesses entering into vertical agreements (e.g., manufacturers, wholesalers, retailers, importers, franchise systems) and, in particular, companies distributing goods or services through online channels and platforms. Competition law advisers and national competition authorities also rely on it to assess compliance with Article 101 TFEU.
Scope
It applies to vertical agreements for the purchase, sale or resale of goods or services within the EU, defining when such agreements benefit from a block exemption under Article 101(3) TFEU.
Key Points
- Provides a block exemption for vertical agreements where neither supplier nor buyer exceeds a 30% market share threshold (subject to conditions).
- Defines “hardcore restrictions” (e.g., certain resale price maintenance and certain territorial/customer restrictions) that remove the benefit of the exemption for the whole agreement.
- Sets out “excluded restrictions” (e.g., certain non-compete obligations exceeding specified durations) that are not exempted even if the rest of the agreement may remain covered.
- Includes specific rules relevant to online sales and platform intermediation (e.g., treatment of online intermediation services and certain parity/most-favoured-nation obligations).
- Clarifies conditions for selective distribution and exclusive distribution, including certain restrictions aimed at protecting distribution systems within defined limits.
Key Deadlines
- — End of transitional period for agreements already in force on 31 May 2022 that complied with Regulation (EU) No 330/2010 but do not meet the conditions of Regulation (EU) 2022/720.
- — Expiry of Regulation (EU) 2022/720.
Related Regulations
Frequently Asked Questions
Who must comply with the Vertical Block Exemption Regulation (VBER)?
Businesses involved in vertical agreements—such as manufacturers, wholesalers, retailers, importers, and franchise systems—must comply with VBER. It is particularly relevant for companies distributing goods or services within the EU, especially those using online channels or platforms.
What types of agreements fall under the scope of VBER?
VBER applies to vertical agreements for the purchase, sale, or resale of goods or services within the EU. These are agreements between businesses operating at different levels of the production or distribution chain.
What is the market share threshold for benefiting from the block exemption?
Both the supplier’s and the buyer’s individual market shares must not exceed 30% on the relevant market for the agreement to benefit from the block exemption provided by VBER.
What are 'hardcore restrictions' under VBER?
Hardcore restrictions are specific types of anti-competitive clauses, such as resale price maintenance or certain territorial/customer restrictions, which remove the benefit of the block exemption for the entire agreement if included.
What are 'excluded restrictions' and how do they affect an agreement?
Excluded restrictions are specific clauses, like certain long-term non-compete obligations, that are not covered by the exemption. If present, only the excluded restriction is not exempted, but the rest of the agreement may still benefit from VBER.
How does VBER address online sales and platform intermediation?
VBER includes specific provisions for online sales and platform intermediation, clarifying the treatment of online intermediation services and certain parity (most-favoured-nation) obligations. This reflects the growing importance of e-commerce in distribution.
What are the key obligations for businesses under VBER?
Businesses must ensure their vertical agreements do not contain hardcore restrictions, comply with market share thresholds, and adhere to rules on excluded restrictions. They should also consider specific rules for online sales and distribution systems.
What are the penalties for non-compliance with VBER?
If an agreement does not comply with VBER, it may be subject to the prohibition in Article 101(1) TFEU, which can result in fines, unenforceability of the agreement, and potential damages claims.
How does VBER interact with other EU competition rules?
VBER provides a safe harbour from Article 101(1) TFEU, but agreements not covered may still be individually assessed under Article 101(3) TFEU. National competition authorities and courts also use VBER as a reference for assessing vertical agreements.
What practical steps should businesses take to ensure compliance with VBER?
Businesses should review their vertical agreements for compliance with market share thresholds, avoid hardcore and excluded restrictions, and stay updated on the latest Vertical Guidelines. Legal advice may be needed for complex or borderline cases.
Key Terms
- Vertical Agreement
- A contract or arrangement between businesses operating at different levels of the supply chain, such as between a manufacturer and a retailer.
- Block Exemption
- A legal provision that automatically exempts certain categories of agreements from the general prohibition of anti-competitive agreements under Article 101(1) TFEU, provided specific conditions are met.
- Hardcore Restrictions
- Clauses in vertical agreements that are considered particularly harmful to competition, such as resale price maintenance or certain territorial restrictions, and which disqualify the entire agreement from the block exemption.
- Excluded Restrictions
- Specific contractual clauses, like certain non-compete obligations, that are not covered by the block exemption, even if the rest of the agreement remains exempted.
- Selective Distribution
- A distribution system where the supplier agrees to sell goods or services only to selected distributors who meet specific criteria, and those distributors agree not to sell to unauthorized dealers.
- Exclusive Distribution
- A distribution arrangement where a supplier grants exclusivity to a distributor for a particular territory or customer group, often with restrictions on active sales by other distributors.
- Online Intermediation Services
- Digital platforms that facilitate transactions between suppliers and customers, such as online marketplaces or comparison sites, and are specifically addressed in VBER.
- Parity Obligation (Most-Favoured-Nation Clause)
- A contractual requirement for a supplier to offer terms to a platform or distributor that are no less favourable than those offered to other channels or platforms.
- Market Share Threshold
- The maximum percentage of market share (30% for both supplier and buyer) that parties to a vertical agreement may have for the agreement to benefit from the block exemption.
- Article 101 TFEU
- The provision of the Treaty on the Functioning of the European Union that prohibits agreements restricting competition, unless exempted under specific conditions such as those set by VBER.