European Commission Vertical Agreements Block Exemption Regulation

The European Commission`s Vertical Agreements Block Exemption Regulation, also known as VABER, is a crucial component of competition law in Europe. This regulation was first introduced in 2010 to provide guidance on how vertical agreements, which are agreements between firms at different stages of the supply chain, are evaluated. The regulation sets out the conditions under which such agreements are considered legal and promotes competition in the market.

Vertical agreements refer to agreements between firms at different levels of the supply chain, such as manufacturers and wholesalers or wholesalers and retailers. These agreements can involve a range of issues, such as pricing, distribution, and marketing. The purpose of VABER is to ensure that such agreements do not harm competition in the market and protect consumers` interests.

Under VABER, vertical agreements are exempted from the EU`s competition rules if they meet certain conditions. The conditions aim to ensure that the agreements do not harm competition, benefit consumers, and are not used by companies to monopolize the market. The regulation is intended to provide legal certainty for companies operating in the EU and avoid inconsistencies between national competition laws.

One of the key conditions of VABER is that the parties` market share should not exceed 30% of the relevant market. This is to prevent dominant firms from using vertical agreements to exclude smaller competitors from the market. Additionally, the agreement must not contain any hardcore restrictions, such as minimum or fixed resale prices, territorial exclusivity, or unfair competition clauses.

VABER also covers specific types of vertical agreements, such as selective distribution agreements and franchising agreements. Selective distribution agreements allow manufacturers to choose which distributors they work with and ensure that their products are sold in specific retail outlets. Franchising agreements are commonly used in the retail industry, allowing franchisees to operate under a specific brand and distribute products within a specific territory.

In summary, VABER is an essential tool for promoting competition and protecting consumers in the EU market. The regulation sets out clear guidelines on what constitutes a legal vertical agreement and ensures that businesses can operate within a level playing field. Companies should be aware of the conditions and requirements under VABER to ensure that their agreements comply with EU competition law.