EU Regulation on Vertical Agreements: What It Means for Businesses
In the European Union (EU), vertical agreements refer to agreements between two or more companies that operate at different levels of the supply chain. These agreements typically govern the terms of the sale or purchase of goods or services between these parties. In recent years, the EU has implemented regulations that govern the conduct of these agreements to ensure fair competition and protect consumers` interests. In this article, we will take a closer look at EU regulation on vertical agreements and what it means for businesses.
What is the EU Regulation on Vertical Agreements?
The EU Regulation on Vertical Agreements (Regulation 330/2010) is a set of guidelines that govern the terms of distribution agreements between suppliers and their customers. It was introduced in 2010 to replace the previous Vertical Agreements Block Exemption Regulation (Regulation 2790/1999), which expired in 2010.
The main aim of the regulation is to prevent anti-competitive practices such as price-fixing, market-sharing, and control over parallel imports. It applies to all types of vertical agreements, including franchising, agency, and distribution agreements.
What are the Key Features of the Regulation?
The EU Regulation on Vertical Agreements is a complex set of rules that covers various aspects of vertical agreements. However, some of the key features include:
1. The regulation exempts certain vertical agreements from competition law provisions, provided that they meet certain criteria. For instance, agreements under which the supplier`s market share does not exceed 30% are automatically exempted from the prohibition of anti-competitive practices.
2. The regulation sets out specific restrictions on vertical agreements, such as restrictions on resale prices and territorial restrictions. These restrictions are assessed on a case-by-case basis to ensure that they do not unduly restrict competition.
3. The regulation provides for a safe harbor for non-compete clauses that protect the supplier`s know-how or trade secrets. These clauses can be included in vertical agreements, provided that they are limited in time and scope.
4. The regulation imposes certain transparency requirements on suppliers, such as the obligation to provide customers with information about the prices and conditions of the goods or services they are selling.
Why is the Regulation Important for Businesses?
The EU Regulation on Vertical Agreements is important for businesses because it provides them with a clear framework for conducting their business activities within the EU. By complying with the regulation, businesses can avoid breaching competition law and facing significant fines and legal action.
The regulation also helps to promote fair competition and protect the interests of consumers. It ensures that suppliers cannot use their dominant market position to impose unfair terms on their customers, such as fixed prices and territorial restrictions.
Conclusion
The EU Regulation on Vertical Agreements is a crucial piece of legislation that governs the terms of distribution agreements in the EU. It provides businesses with a clear framework for conducting their activities within the EU, while promoting fair competition and protecting consumers` interests. As a professional, it is essential to understand how this regulation affects businesses and the importance of complying with its requirements.