Vertical Agreements Eu Regulation

Vertical agreements, also known as vertical restraints, are agreements between two or more companies at different levels of the supply chain, such as suppliers and retailers. These agreements can have significant effects on competition in the market, and as such, they are regulated by the European Union (EU) to ensure fair and open competition.

The EU’s approach to regulating vertical agreements is based on the concept of the “single economic entity.” This means that companies operating at different levels of the supply chain can be considered a single entity if they have a high degree of economic integration, such as a supplier and a retailer that are owned by the same parent company. However, if the companies are not part of a single economic entity, their agreements and practices must comply with the EU’s competition rules.

The EU’s rules on vertical agreements are set out in its Vertical Block Exemption Regulation (VBER) and accompanying guidelines. The VBER provides a safe harbor for certain types of vertical agreements that are presumed to be compatible with EU competition law. These include agreements that contain specific restrictions, such as resale price maintenance and territorial restrictions, that are not considered to be anti-competitive if certain conditions are met.

The VBER also sets out a number of criteria that must be met for an agreement to benefit from the safe harbor, such as a market share threshold for the companies involved and a requirement that the agreement does not contain any “hardcore restrictions” that are always anti-competitive, such as price-fixing or market-sharing.

The EU’s guidelines on vertical restraints provide further guidance on how the VBER should be applied in practice. These guidelines cover a range of issues, including how to determine market power, how to assess the competitive effects of vertical agreements, and how to analyze the pro-competitive and anti-competitive effects of specific types of vertical restraints.

Overall, the EU’s regulation of vertical agreements is designed to ensure that competition in the market is open and fair, and that consumers have access to a wide variety of products and services at competitive prices. Companies operating at different levels of the supply chain must ensure that their agreements and practices comply with the EU’s competition rules, and that they do not engage in anti-competitive behavior that could harm competition and ultimately harm consumers.