On September 8, 2020, the European Commission (Commission) published its findings of the evaluation of the Vertical Block Exemption (VBER) and the Vertical Guidelines.
The review procedure is split into two phases: (i) an evaluation phase (approx. 18 months) and (ii) an impact assessment phase (approx. 24 months). The purpose of this initial phase was to gather evidence on the functionality of the VBER and the Vertical Guidelines, which will then allow the Commission to decide whether it should let the VBER lapse, prolong its duration or revise it.
Evidence was gathered from various sources. These include a public consultation, a targeted consultation of national competition authorities, a stakeholder workshop and an external evaluation support study, inter alia. The public consultation was between February 4, 2019, and May 27, 2019, and 164 stakeholders filled in the Commission questionnaire.
Overall, the evidence gathered suggests that the VBER, together with the Vertical Guidelines, is useful and remains relevant for stakeholders. However, the evaluation has identified a number of issues, which the Commission will consider during the next ‘impact assessment’ phase.
Key findings of the evaluation
Stakeholders identified certain provisions that lack clarity, are difficult to apply or no longer adapted to the market developments that took place since the adoption of the VBER and the Vertical Guidelines. In particular, stakeholders identified gaps in the rules that do not refer to case law issued since the adoption of the rules (e.g. the CJEU’s Coty judgment).
The evaluation has identified a perceived lack of clarity in respect of certain provisions as well as gaps in the current rules that have resulted in diverging interpretations during the last ten years.
In terms of relevance, the evidence suggests that the VBER and the Vertical Guidelines are not sufficiently well adapted to the current market environment. For example, the use of selective distribution systems has increased whereas exclusive distribution is used less frequently today. Similarly, consumers nowadays expect to have a continuous omni-channel experience across a variety of different channels such as offline and online shops, marketplaces and other platforms.
Stakeholders unanimously confirmed that the VBER and the Vertical Guidelines are still useful tools that greatly facilitate the self-assessment of vertical agreements. However, in view of the market developments that occurred since the adoption of the rules, there is a clear need for rules that provide legal certainty for the assessment of the new vertical restrictions in the context of e-commerce. These include the assessment of online sales and advertising restrictions and dual (offline/online) pricing as well as the distinction between active and passive sales.
Stakeholders also mentioned a number of other areas of the rules as not functioning well for reasons not necessarily linked to market developments. These include:
- Some of the hardcore restrictions (e.g. RPM);
- Excluded restrictions (e.g. non-compete clauses);
- Certain distribution models (e.g. franchising); and
- Combination of different distribution models (e.g. the use of exclusive and selective distribution by the same supplier).
As more general issues, the evaluation suggests that there is a need for rules which are future-proof. This means that they should not only address known issues but also contain principles that can cater for possible new types of vertical agreements and restrictions. Stakeholders also pointed to unclear wording or structure and a lack of clear definitions and guidance.
Following this evaluation, the Commission will launch an impact assessment to look into the issues with a view to having revised rules in place by May 31, 2022, when the current rules will expire.
Stakeholders will be invited to comment on the inception impact assessment and to provide their views in the context of a public consultation. In the course of next year, the Commission will also publish a draft of the revised rules for stakeholder comments.