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International Distribution Law: New Vertical Block Exemption Regulation

Distribution law

International Distribution Law: New Vertical Block Exemption Regulation

On 01 June 2022, the new version of the Vertical Block Exemption Regulation No. 720/2022 (VBER) of 10.05.2022 entered into force. The European Commission has also published the new version of the Guidelines on vertical restraints.

The revised regulation has taken over the basic systematics of the former version but has introduced important novelties.

The regulation continues to apply to vertical agreements provided that the market shares of the undertakings involved on the relevant markets do not exceed 30 per cent each.

One of the relevant changes concerns online trade. While the principle that a general online prohibition at the expense of the buyer does not enjoy the benefit of exemption continues to apply, restrictions on the use of a particular online distribution channel, such as online marketplaces, as well as the setting of quality standards for online sales, also irrespective of the type of distribution system, are explicitly exempted. Furthermore, differentiated pricing systems for online and offline trade are now no longer considered a hardcore restriction.

With regard to customer and territorial restrictions, the systematics of the old regulation was preserved, but changes were introduced that allow more leeway when planning the distribution system. For example, split exclusive distribution (up to a maximum of five distributors) and the contractual obligation of the buyer to pass on the customer and territory restrictions to his customers are now allowed. The issue of the demarcation between active and passive distribution, which has so far only been dealt with in the guidelines, is now addressed directly in the new regulation.

Further changes have affected dual distribution (i.e. when the supplier markets products partly directly and partly through distributors) and price parity clauses.

The Commission has also clarified in the guidelines that online platforms are not considered commercial agents for the purposes of the regulation and are therefore not subject to the commercial agent privilege (applicable only to the "real" commercial agent).