Vertical Restraints under EU Competition Law: Conceptual Foundations and Practical Framework

Abstract

The purpose of this paper is to provide a full account of the new European rules on distribution agreements adopted in April 2010, i.e. Regulation 330/2010 and its concomitant Guidelines on Vertical Restraints. In doing so the paper covers all aspects of the law in this field - with the notable exception of agency agreements - and discusses the development of the law since the 1960s to the present day. Such development is principally characterised by an increased focus on the economic effects produced by vertical restraints and a movement away from a strict form-based approach. The paper is divided into five sections. Following a short introduction, section II sets out the different types of vertical restraint commonly found in commercial contracts of a vertical nature and the theories of harm (such as risks of foreclosure and collusion) and pro-competitive effects ascribed to them under EU competition law. Section II discusses not only those types of vertical restraint that one may traditionally come across - such as resale price maintenance clauses - but also discusses two novel areas, namely upfront access payments and category management agreements which relate to the issue of buyer power. Section III offers a step-by-step overview of the method that in our eyes ought ideally be followed by agencies, firms and their legal counsels when engaging in a self asssessment - in the post notification era - of vertical agreements under Article 101 TFEU. Section IV deals with the issue of online distribution, which sparked intense controversy during the stakeholder consultation process. In line with commercial reality and the ubiquity of online commerce it is in our opinion entirely appropariate that the new law on vertical restraints now provides extensive guidance on the issue. Finally a brief conclusion is provided in section V.

Keywords: antitrust, EU competition law, distribution, vertical restraints, online commerce, market shares

JEL Classification: K21; L42