Exemption For Vertical Supply And Distribution Agreements

8 Dec

The Commission`s new approach to applying the EC`s competition policy to vertical restrictions is seen as more economically realistic than it has been so far. Vertical agreements should not face serious competition problems when market outcomes are limited or non-existent, and the category exemption regulation therefore takes a more liberal approach. The new regulation does not apply beyond a threshold of 30% of the supplier`s market share or, in exclusive situations that concern the entire COMMUNITY, the buyer. (The 30% threshold may be exceeded for a period of two calendar years, provided that the market share does not exceed 35% or does not do so for more than one calendar year during that two-year period.) Market share is calculated on the basis of the previous calendar year and covers all products or services provided to integrated distributors for sale. The CMA can evaluate all agreements. In particular, under the Vertical Class Exemption Regulation, where parallel networks with similar vertical restrictions cover more than 50% of a market in question, the CMA may adopt a resolution that the vertical class exemption does not apply to these restrictions. The general prohibition does not apply to restrictions imposed on the purchaser (licensed) that do not exceed the limits of the ip holder`s legitimate rights (see question 14 for the list of authorized restrictions). Vertical agreements that contain provisions relating to the transfer or use of intellectual property rights by the purchaser are also covered by the vertical category exemption settlement (see question 18), to the extent that (i) these provisions are not the main purpose of these agreements and are directly related to the use, sale or resale of products by the purchaser or his or her customers. , and (ii) with respect to contractual products, these provisions do not contain competition restrictions that serve the same purpose as vertical restrictions that are not exempt from the vertical category exemption regulation.

Such a vertical restriction may continue to be excluded from the ban by obtaining the corresponding individual authorization from the CMA if such restriction contributes to the rationalization of production, the promotion of technical or economic development, the optimization of export or import procedures, the development and application of uniform product standards, etc., unless it results in a significant restriction of competition in the market or a substantial part of it.