New vertical competition rules

Parts of the EU competition rules were revised on 1 June. This applies to agreements and collaborations between businesses in different sections of the supply chain, such as manufacturers and retailers, wholesalers and distributors.

According to the EU competition rules, agreements and collaborations must not result in competition being restricted in such a way that harms consumers. It is up to each business to assess and ensure that its own agreements and collaborations meet these regulatory requirements. This is not an entirely straightforward task. The existing group exemption within the EU competition framework – the Vertical Block Exemption Regulation (VBER) – helps businesses in this respect as it describes various conditions and situations in which businesses can be certain that they do not violate the regulations.

The competition rules ensure that all businesses compete according to the same rules. The regulations must be updated according to how markets function today; a lot has changed in terms of distribution and online sales in particular. At the same time, the regulations are complicated and require many businesses to constantly assess their own actions in relation to the regulations. All clarifications are therefore extremely welcome. Swedish Enterprise therefore welcomes the Commission’s revisions, and that corresponding Swedish legislation will be updated soon so that the regulations in Sweden and the EU are identical.

The revisions focus mainly on the four parts of VBER. The first two limit VBER, while the other two open up VBER somewhat.

• Double distribution – where manufacturers sell through retailers and directly to consumers. This is much more common today than in the past and can therefore be more problematic from a competition perspective. Scope for using VBER is therefore limited, especially for information sharing between manufacturers and resellers covered by the agreement, as well as agreements between so-called hybrid platforms, (digital platforms that provide goods and services on behalf of other suppliers as well as sell their own goods and services in competition with them); and businesses that use their platforms to provide goods and services.
• Parity clauses – broad parity clauses are excluded from VBER, i.e., clauses restricting pricing on other platforms must be assessed individually and therefore removed from VBER. Narrow parity clauses are still included, such as sales through own channels.
• Active sales restrictions – restrictions on buyers’ ability to actively approach customers. This is typically a particularly strict limitation. This is now being eased to make it easier for businesses to structure their distribution systems. Shared exclusivity is introduced, which makes it possible for suppliers to appoint up to a maximum of five distributors per exclusive area or customer group.
• Special online sales restrictions – online sales are no longer considered to need “protection”; it will therefore be permitted to charge other (higher) prices online than offline if desired.