Vertical agreements are those between companies at different levels of trade or a supply chain. Such agreements often concern the parties' feasibility of buying, selling, or reselling certain goods or services, for instance on online platforms.
Vertical agreements can have both negative and positive effects on competition. When the positive effects outweigh the negative ones, EU competition law provides the possibility to allow contract terms which may restrict competition. The European Commission has adopted a Vertical Block Exemption Regulation (VBER) that applies to the types of vertical agreements that are considered to have predominantly positive effects on competition. The most recent version of the VBER came into force in June 2022, and enlarged the scope of the safe harbour in relation to active sales and online sales.
So, when is this Block Exemption Regulation applicable?
The VBER, covering all vertical agreements, requires that the market share held by the supplier and the buyer does not exceed 30%.
The importance of the market share for using the block exemption brings the need to correctly define the relevant market and applying economic analyses. Companies that want to assess whether their agreements are exempt or not, have to define their market share on the relevant market as outlined in the European Commission's notice on the definition of the relevant market.
A correct and appropriate market definition gives firms the chance to gain legal certainty about their agreements. This means a correct definition of the relevant market is essential.
EE&MC offers economic expertise in this area to find out an undertaking’s market share.