(1)

Regulation No 19/65/EEC empowers the Commission to apply Article 101(3) of the Treaty by regulation to certain categories of vertical agreements and corresponding concerted practices falling within Article 101(1) of the Treaty.

(2)

Commission Regulation (EU) No 330/2010 (3) defines a category of vertical agreements that the Commission regarded as normally satisfying the conditions laid down in Article 101(3) of the Treaty. Experience with the application of Regulation (EU) No 330/2010, which expires on 31 May 2022, has been positive overall, as shown by the evaluation of that Regulation. Taking into account that experience as well as new market developments, such as the growth of e-commerce, and new or more prevalent types of vertical agreements, it is appropriate to adopt a new block exemption regulation.

(3)

The category of agreements which can be regarded as normally satisfying the conditions laid down in Article 101(3) of the Treaty includes vertical agreements for the purchase or sale of goods or services where those agreements are concluded between non-competing undertakings, between certain competitors or by certain associations of retailers of goods. It also includes vertical agreements containing ancillary provisions on the assignment or use of intellectual property rights. The term ‘vertical agreements’ should be understood to include the corresponding concerted practices.

(4)

For the application of Article 101(3) of the Treaty by regulation, it is not necessary to define those vertical agreements which are capable of falling within Article 101(1) of the Treaty. In the individual assessment of agreements under Article 101(1) of the Treaty, account has to be taken of several factors, in particular the market structure on the supply and purchase side.

(5)

The benefit of the block exemption established by this Regulation should be limited to vertical agreements for which it can be assumed with sufficient certainty that they satisfy the conditions of Article 101(3) of the Treaty.

(6)

Certain types of vertical agreements can improve economic efficiency within a chain of production or distribution by facilitating better coordination between the participating undertakings. In particular, they can lead to a reduction in the transaction and distribution costs of the parties and to an optimisation of their sales and investment levels.

(7)

The likelihood that such efficiency-enhancing effects will outweigh any anti-competitive effects due to restrictions contained in vertical agreements depends on the degree of market power of the parties to the agreement and, in particular, on the extent to which those undertakings face competition from other suppliers of goods or services regarded by their customers as interchangeable or substitutable for one another, by reason of the products’ characteristics, their prices and their intended use.

(8)

It can be presumed that, where the market share held by each of the undertakings party to the agreement on the relevant market does not exceed 30%, vertical agreements which do not contain certain types of severe restrictions of competition generally lead to an improvement in production or distribution and allow consumers a fair share of the resulting benefits.

(9)

Above the market share threshold of 30 %, there can be no presumption that vertical agreements falling within the scope of Article 101(1) of the Treaty will usually give rise to objective advantages of such a character and size as to compensate for the disadvantages that they create for competition. At the same time, there is no presumption that those vertical agreements are either caught by Article 101(1) of the Treaty or that they fail to satisfy the conditions of Article 101(3) of the Treaty.

(10)

The online platform economy plays an increasingly important role in the distribution of goods and services. Undertakings active in the online platform economy make it possible to do business in new ways, some of which are not easy to categorise using concepts associated with vertical agreements in the traditional economy. In particular, online intermediation services allow undertakings to offer goods or services to other undertakings or to final consumers, with a view to facilitating the initiation of direct transactions between undertakings or between undertakings and final consumers. Agreements relating to the provision of online intermediation services are vertical agreements and should therefore be able to benefit from the block exemption established by this Regulation, subject to the conditions set out in this Regulation.

(11)

The definition of online intermediation services used in Regulation (EU) 2019/1150 of the European Parliament and of the Council (4) should be adapted for the purpose of the present Regulation. In particular, to reflect the scope of Article 101 of the Treaty, the definition used in the present Regulation should refer to undertakings. It should also include online intermediation services that facilitate the initiation of direct transactions between undertakings, as well as those that facilitate the initiation of direct transactions between undertakings and final consumers.

(12)

Dual distribution refers to the scenario where a supplier sells goods or services not only at the upstream level but also at the downstream level, thereby competing with its independent distributors. In that scenario, in the absence of hardcore restrictions, and provided that the buyer does not compete with the supplier at the upstream level, the potential negative impact of the vertical agreement on the competitive relationship between the supplier and buyer at the downstream level is less important than the potential positive impact of the vertical agreement on competition in general at the upstream or downstream level. This Regulation should therefore exempt vertical agreements entered into in such scenarios of dual distribution.

(13)

The exchange of information between a supplier and buyer can contribute to the pro-competitive effects of vertical agreements, in particular the optimisation of production and distribution processes. However, in dual distribution, the exchange of certain types of information may raise horizontal concerns. Therefore, this Regulation should only exempt information exchange between a supplier and a buyer in a dual distribution scenario where the information exchange is both directly related to the implementation of the vertical agreement and necessary to improve the production or distribution of the contract goods or services.

(14)

The rationale for exempting vertical agreements in scenarios of dual distribution does not apply to vertical agreements relating to the provision of online intermediation services where the provider of the online intermediation services is also a competing undertaking on the relevant market for the sale of the intermediated goods or services. Providers of online intermediation services that have such a hybrid function may have the ability and the incentive to influence the outcome of competition on the relevant market for the sale of the intermediated goods or services. This Regulation should therefore not exempt such vertical agreements.

(15)

This Regulation should not exempt vertical agreements containing restrictions which are likely to restrict competition and harm consumers or which are not indispensable to the attainment of the efficiency-enhancing effects. In particular, the benefit of the block exemption established by this Regulation should not apply to vertical agreements containing certain types of severe restrictions of competition, such as minimum and fixed resale prices and certain types of territorial protection, including the prevention of the effective use of the internet to sell or certain restrictions of online advertising. Accordingly, restrictions of online sales and online advertising should benefit from the block exemption established by this Regulation, provided that they do not, directly or indirectly, in isolation or in combination with other factors controlled by the parties, have the object of preventing the effective use of the internet by the buyer or its customers to sell the contract goods or services to particular territories or customers, or of preventing the use of an entire online advertising channel, such as price comparison services or search engine advertising. For instance, online sales restrictions should not benefit from the block exemption established by this Regulation where their objective is to significantly diminish the aggregate volume of online sales of the contract goods or services in the relevant market or the possibility for consumers to buy the contract goods or services online. The categorisation of a restriction as hardcore within the meaning of Article 4, point (e) may take into account the content and context of the restriction, but should not depend on market-specific circumstances or the individual characteristics of the parties.

(16)

This Regulation should not exempt restrictions for which it cannot be assumed with sufficient certainty that they satisfy the conditions of Article 101(3) of the Treaty. In particular, to ensure access to and to prevent collusion on the relevant market, certain conditions should be attached to the block exemption. To this end, the exemption of non-compete obligations should be limited to obligations which do not exceed a duration of five years. Obligations causing the members of a selective distribution system not to sell the brands of particular competing suppliers should likewise be excluded from the benefit of this Regulation. The benefit of this Regulation should not apply to retail parity obligations causing buyers of online intermediation services not to offer, sell or resell goods or services to end users under more favourable conditions via competing online intermediation services.

(17)

The market share limitation, the non-exemption of certain vertical agreements and the conditions provided for in this Regulation generally ensure that the agreements to which the block exemption applies do not enable the participating undertakings to eliminate competition in respect of a substantial part of the goods or services in question.

(18)

The Commission may withdraw the benefit of this Regulation, pursuant to Article 29(1) of Council Regulation (EC) No 1/2003 (5), where it finds in a particular case that an agreement to which the block exemption established by this Regulation applies nevertheless has effects which are incompatible with Article 101(3) of the Treaty. The competition authority of a Member State may withdraw the benefit of this Regulation where the conditions of Article 29(2) of Regulation (EC) No 1/2003 are fulfilled.

(19)

Where the Commission or the competition authority of a Member State withdraws the benefit of this Regulation, it has the burden of proving that the vertical agreement in question falls within the scope of Article 101(1) of the Treaty, and that the agreement fails to fulfil at least one of the four conditions of Article 101(3) of the Treaty.

(20)

In determining whether the benefit of this Regulation should be withdrawn pursuant to Article 29 of Regulation (EC) No 1/2003, the anti-competitive effects that may derive from the existence of parallel networks of vertical agreements that have similar effects, which significantly restrict access to a relevant market or competition therein, are of particular importance. Such cumulative effects may in particular arise in the case of exclusive distribution, exclusive supply, selective distribution, parity obligations or non-compete obligations.

(21)

In order to strengthen the supervision of parallel networks of vertical agreements which have similar anti-competitive effects and which cover more than 50% of a given market, the Commission may by regulation declare this Regulation inapplicable to vertical agreements containing specific restraints relating to the market concerned, thereby restoring the full application of Article 101 of the Treaty to such agreements,