Background

Economic theory of vertical restraints

Economic theory and competition law

Should distributors have more protection?

Vertical restraints put to the test of economic analysis

Structure of distribution law - Book plan

General bibliography

Introduction

Localizing the anticompetitive effects

Effect on trade between Member States

Scope ratione loci

Concept of an undertaking

Intra-group agreements

Scope ratione personae

Applicability of competition law to vertical agreements

Definition of the relevant market

Anticompetitive object or effect

Appreciability threshold

Concept of agreement and concerted practice

Prohibition of vertical restraints

Block exemptions

Individual exemptions and rule of reason

Exemption of vertical restraints

Control of vertical restraints

Prohibition

Exoneration

Restrictive agreements

Principle

Applications

Abuse of dominant position

Exclusive purchase/Exclusive supply

Resale outside network

International agreement

Exclusive distribution agreements

Manufacturer's guarantee

Protection of the brand

Protecting the network against third parties

Relations between the parties

Selective distribution

Hardcore restrictions

Individual exemptions

Rule of reason

Prohibition of restrictive agreements and individual exemptions

Distribution of new motor vehicles : Regulation No 330/2010

After-sales : Regulation No 461/2010

Block exemption

Motor vehicle distribution agreements

Merger control

Franchising

Commercial agency and competition

EU harmonization

International agency

Commercial agents

This book provides a wide-ranging review of the European rules relating to distribution: exclusive purchase and exclusive supply, exclusive and selective distribution, motor vehicle distribution, franchises, commercial agents.

European Distribution Law

Article 2 of Regulation No 1400/2002 of 31 July 2002 declared that Article 101(1) was not applicable to agreements including vertical restraints where they related to the conditions under which the parties could purchase, sell or resell new motor vehicles, spare parts for motor vehicles or repair and maintenance services for motor vehicles. The regulation did not apply to agreements relating to the buying, selling or reselling of vehicles that were not self-propelled vehicles intended for use on public roads and having three or more road wheels, such as horse-drawn vehicles, second-hand vehicles, two-wheel vehicles, farming equipment, forklifts and construction and public works equipment . General Regulation on Vertical Restraints  which replaces Regulation No 1400/2002, applies to all vertical agreements without distinction, i.e. agreements or concerted practices between two or more undertakings each of which operate for the purposes of the agreement at a different level of the production and distribution chain, and relating to the conditions under which the parties may buy, sell or resell certain goods or services .

Like Regulation No 1400/2002, the general regulation covers vertical agreements entered into between an association of undertakings and its members, or between such an association and its suppliers. The functioning of the association will be subject to a dual control since horizontal agreements concluded between the members of the association or decisions adopted by the association are not covered by the exemption. Vertical agreements between the association and its members or between the association and its suppliers will be examined only if the horizontal agreement is first held valid. To benefit from an exemption, all the members of the association must be retailers with no individual member of that association, together with its connected undertakings, having a total annual turnover exceeding EUR 50 million . Addressing the issue raised by trade groups demanding a more favorable system enabling them to obtain better competition conditions from large retailers, Article 2(2) is now quite restrictive insofar as it tends to make the benefit of exemption subject to supplementary conditions as compared to the system established by the other provisions of the regulation.

The regulation also applies to agreements which relate to the assignment to the buyer or use by the buyer of intellectual property rights, provided that they do not constitute the primary object of such agreements and are directly related to the use, sale or resale of goods or services by the buyer or its customers .

Agreements between competing undertakings are normally excluded from the scope of the Block Exemption Regulation . The Commission had, under Regulation No 1475/95, justified the exclusion of agreements whereby one motor vehicle manufacturer entrusts the distribution of its products to another, by underlining that such agreements create a significant adverse effect on competition . However, it is not unusual for a manufacturer with a well-established distribution network on one or more markets to distribute the motor vehicles of a competitor whose commercial network is less extensive or who is not willing to create a network from scratch. Although such agreements cannot benefit from the block exemption, they may be granted an individual exemption. However, the provision sets out two exceptions to the non-applicability of the block exemption to agreements between competitors, which relate to non-reciprocal agreements under which one competitor handles the distribution of the goods of the other whereas the reverse is not the case. The exemption applies (i) to dual distribution situations, where the manufacturer or supplier of a particular product is also involved in the distribution of that product in competition with independent distributors, but the buyer is a distributor who does not manufacture products that compete with the contract products, or (ii) to dual distribution of services where the supplier is also a service provider and sells its services to buyers who are its competitors at a different level of trade.

Commission Decision No 2002/190 of 21 December 2000, JCB, LawLex200500004731JBJ, excluding the sale of construction and earth moving equipment from the scope of application of the regulation; approved by Case T-67/01 JCB Service v Commission [2004] ECR II-49, LawLex200500004797JBJ.

Reg. No 2022/720 of 10 May 2022, which replaces Reg. No 330/2010 of 20 April 2010.

Reg. No 2020/720, Art. 2(2) Reg. No 1400/2002, Art. 2(2)(a).

Regulation No 1475/95 of 28 June 1995, pt 21.

Scope of application

85. Scope of application