Vertical Agreements Block Exemption Uk

Vertical agreements block exemption UK: What You Need to Know

In the UK, businesses can enter into vertical agreements, which are agreements between firms operating at different levels of the supply chain. Vertical agreements can have many benefits, including reducing transaction costs, increasing efficiency, and improving consumer welfare. However, these agreements can also raise competition concerns, particularly if they limit competition in the market.

To address these concerns, the European Commission has issued a block exemption for vertical agreements. This exemption allows businesses to enter into vertical agreements without the fear of violating competition law, as long as their agreements meet certain conditions.

In the UK, the block exemption for vertical agreements is implemented via the Vertical Agreements Block Exemption Regulation (VABER). The VABER covers a wide range of vertical agreements, including agreements between manufacturers and distributors, suppliers and retailers, and franchisors and franchisees.

To be covered by the block exemption, vertical agreements must comply with a number of conditions. These include:

1. Non-exclusivity: The agreement cannot require one or both parties to exclusively purchase or sell goods or services.

2. Market share: The combined market share of the parties must not exceed a certain threshold. In general, this threshold is 30% for agreements between competitors and 35% for agreements between non-competitors.

3. Restrictions: The agreement cannot contain certain types of restrictions, including resale price maintenance, territorial restrictions, and customer restrictions.

4. Benefits: The agreement must produce benefits for consumers, such as increased efficiency, innovation, or quality.

If a vertical agreement meets these conditions, it will be automatically exempt from competition law under the VABER. However, businesses should still exercise caution when entering into vertical agreements, as the VABER does not provide immunity from other areas of competition law, such as abuse of a dominant position.

In addition, businesses should be aware of the European Commission`s guidelines on vertical restraints, which provide further guidance on how to comply with competition law when entering into vertical agreements. These guidelines cover a wide range of issues, including pricing, advertising, and online sales.

In conclusion, the vertical agreements block exemption UK provides a valuable tool for businesses entering into vertical agreements. By ensuring that their agreements meet the conditions set out in the VABER, businesses can avoid violating competition law while still enjoying the benefits of vertical integration. However, businesses should still exercise caution and seek legal advice when entering into vertical agreements, to ensure that they comply with all aspects of competition law.