DLC – Countdown 14 – Vertical in the spotlight: Active sales restrictions (rolling over prohibition) (EN)

“VERTICAL” IN THE SPOTLIGHT: ACTIVE SALES RESTRICTIONS ROLLING OVER PROHIBITION GETTING READY FOR 1 JUNE 2022 AND EUROPEAN COMPETITION RULES CHANGE     WHAT? Classic notions in the world of vertical agreements are those of “active sales” and “passive sales”. Active sales involve some form of active targeting of a particular customer group or territory. Passive sales consist of transactions in response to unsolicited requests from individual customers without having initiated the sales by means of active targeting of such customers. In order to protect efforts and investments made by exclusive, but non-selective distributors, the block exemption regime accepts under … Continue reading

DLC – Countdown 13 – Vertical in the spotlight: Active sales restrictions (parallel imposition) (EN)

“VERTICAL” IN THE SPOTLIGHT: ACTIVE SALES RESTRICTIONS PARALLEL IMPOSITION REQUIREMENT GETTING READY FOR 1 JUNE 2022 AND EUROPEAN COMPETITION RULES CHANGE   WHAT? Classic notions in the world of vertical agreements are those of “active sales” and “passive sales”. Active sales involve some form of active targeting of a particular customer group or territory. Passive sales consist of transactions in response to unsolicited requests from individual customers without having initiated the sales by means of active targeting of such customers. In order to protect efforts and investments made by exclusive, but non-selective distributors, the block exemption regime accepts under strict … Continue reading

DLC – Countdown 12 – Vertical in the spotlight: Active sales restrictions (exclusivity condition) (EN)

“VERTICAL” IN THE SPOTLIGHT: ACTIVE SALES RESTRICTIONS EXCLUSIVITY CONDITION GETTING READY FOR 1 JUNE 2022 AND EUROPEAN COMPETITION RULES CHANGE   WHAT? Classic notions in the world of vertical agreements are those of “active sales” and “passive sales”. Active sales involve some form of active targeting of a particular customer group or territory. Passive sales consist of transactions in response to unsolicited requests from individual customers without having initiated the sales by means of active targeting of such customers. More concretely, if a distributor sends a publicity letter or mail to a particular customer, he is engaging in active sales … Continue reading

DLC – Countdown 11 – Vertical in the spotlight: Hardcore restrictions – Equivalence (EN)

“VERTICAL” IN THE SPOTLIGHT: HARDCORE RESTRICTIONS EQUIVALENCE GETTING READY FOR 1 JUNE 2022 AND EUROPEAN COMPETITION RULES CHANGE   WHAT? Online sales restrictions are under close scrutiny from the European Commission and national competition authorities. It is well established that outright online sales bans are qualified as hardcore restrictions, which cannot benefit from the VBER. However, also with respect to other online sales restrictions businesses must tread carefully. For example, in a selective distribution system, brand owners may set online sales criteria in order to protect their brand when distributors are selling online. The European Commission provides that such criteria … Continue reading

DLC – Countdown 10 – Vertical in the spotlight: Hardcore restrictions – dual pricing (EN)

“VERTICAL” IN THE SPOTLIGHT: HARDCORE RESTRICTIONS – DUAL PRICING GETTING READY FOR 1 JUNE 2022 AND EUROPEAN COMPETITION RULES CHANGE   WHAT? When a supplier or manufacturer charges different wholesale prices for the same product depending on whether the product is intended to be sold online or offline, or whether the buyer will sell it to a retailer or directly to end-customers, dual pricing is practiced. A dual pricing practice does not always qualify as a restriction of competition, although it is a valid presumption that this is the case where sales via the internet are disadvantaged. The underlying rationale for such … Continue reading

DLC – Countdown 9 – Vertical in the spotlight: Hardcore restrictions – resale price maintenance (EN)

“VERTICAL” IN THE SPOTLIGHT: HARDCORE RESTRICTIONS – RESALE PRICE MAINTENANCE GETTING READY FOR 1 JUNE 2022 AND EUROPEAN COMPETITION RULES CHANGE   WHAT? Certain types of vertical restraints are particularly likely to hinder competition and harm consumers. These hardcore restrictions will not benefit from the safe harbour provided in the VBER and will often amount to an infringement of Article 101 TFEU. Resale price maintenance (“RPM”) constitutes a prime example of such hardcore or black-listed restrictions. RPM refers to vertical price fixing: a situation where, as a result of a vertical agreement, the buyer’s ability to set its resale price is … Continue reading

DLC – Countdown 8 – Vertical in the spotlight: Hardcore restrictions general (EN)

“VERTICAL” IN THE SPOTLIGHT: HARDCORE RESTRICTIONS GENERAL GETTING READY FOR 1 JUNE 2022 AND EUROPEAN COMPETITION RULES CHANGE   WHAT? Vertical agreements often contain a vast number of provisions, regulating different aspects of a vertical relationship. However, the EU competition rules determine that certain provisions cannot be included in distribution agreements since they impede competition to an extent that cannot be permitted. These are the so-called “hardcore restrictions”. Hardcore restrictions can be imposed both directly and indirectly, in which case the assessment is more complex, but the outcome is the same. Including a hardcore restriction in a vertical agreement has … Continue reading

DLC – Countdown 7 – Vertical in the spotlight: Non-compete restrictions – post term (EN)

“VERTICAL” IN THE SPOTLIGHT: NON-COMPETE RESTRICTIONS (POST TERM) GETTING READY FOR 1 JUNE 2022 AND EUROPEAN COMPETITION RULES CHANGE   WHAT? Suppliers often provide commercial know-how to their distributors which they would not want to benefit their competitors. A critical situation in that respect is obviously the period immediately following the termination of a distribution agreement. The distributor is likely to switch to a competing supplier and there is a real risk that the distributor will share the know-how with his new supplier. In order to address this issue, distribution agreements may include a so-called post-term non-compete obligation. This obligation … Continue reading

DLC – Countdown 6 – Vertical in the spotlight: Non-compete restrictions (EN)

“VERTICAL” IN THE SPOTLIGHT: NON-COMPETE RESTRICTIONS GETTING READY FOR 1 JUNE 2022 AND EUROPEAN COMPETITION RULES CHANGE   WHAT? Distribution agreements often contain non-compete clauses. They impose restrictions on a distributor’s ability to manufacture or sell products competing with the products covered by the distribution agreement, the so-called contract products. Let us make things concrete. A distributor is appointed to sell vacuum cleaners of brand A (the contract products). The non-compete restriction determines whether the distributor is allowed (and, if so, to what extent) to manufacture or sell vacuum cleaners of competing brand B or any other competing brand for … Continue reading

DLC – Countdown 5 – Vertical in the spotlight: Agency (Dual Role agents) (EN)

“VERTICAL” IN THE SPOTLIGHT: AGENCY (“DUAL ROLE” AGENTS) GETTING READY FOR 1 JUNE 2022 AND EUROPEAN COMPETITION RULES CHANGE   WHAT? Over the past few years, a trend has been noticeable toward a commercial strategy combining agency and distribution models. In particular, depending on the products or customers involved, a business partner is sometimes requested by the same supplier to act as both its independent distributor and its commercial agent. Such business partners are often referred to as “dual role” agents. Let us make things concrete. A supplier of cooking appliances relies on independent distributors for the distribution of the … Continue reading