The new VBER
After a thorough review of the rules from 2010, the European Commission approved the new Vertical Block Exemption Regulation (VBER) and the accompanying new Vertical Guidelines on 10 May 2022. The revised VBER and vertical guidelines will enter into force on 1 June 2022. The VBER affects the design of so-called vertical agreements, including franchise, agency and distribution relationships.
On the one hand, the new VBER builds on the existing VBER and clarifies certain matters which were under discussion. On the other hand, it also introduces new rules. Below we briefly explain a number of topics that may require changes to the structure of your company’s organisation or contracts.
Online sales and marketing
The adjustments in the VBER are partly aimed at online sales, in which, of course, there have been major developments in the past 10 years. New rules and clarifications are introduced regarding the use of marketplaces, platforms and price comparison sites by distributors, franchisees and agents. Below we provide an overview of some of the important changes:
Price fixing: the imposition of fixed or minimum prices is still a hardcore prohibition in the new VBER. This ban now also applies to online brokers and platforms.
Online advertising and sales: franchisees and distributors may in general still not be prohibited from advertising and selling online and setting up their own website. However, it is interesting to note the clarification given in the Guidelines regarding the imposition of permissible quality requirements by franchisors/suppliers on such a website. It is advisable to review or clarify the requirements included in contracts and handbooks in this regard.
More clarity has also been created about online marketplaces. Franchisors and suppliers may prohibit their franchisees/customers from using these under certain conditions.
However, directly or indirectly prohibiting the use of price comparison sites to buyers/franchisees is not permissible, unless it concerns a form of targeted advertising in the exclusive contract territory of a fellow distributor or franchisee.
Exclusive and selective distribution
The new VBER introduces the concept of “shared exclusivity”. This means that the supplier may limit active sales by its other distributors in a territory or to a customer group allocated by the supplier to a maximum of five exclusive distributors. Moreover, the supplier may require that such restrictions on active sales be passed on to the direct customers of its other distributors.
Furthermore, the new VBER provides better protection for selective distribution systems: suppliers may now prohibit customers and their customers from selling to unauthorised distributors located in an area where the supplier operates a selective distribution system, regardless of whether those customers and customers are located inside or outside that area.
Dual distribution is an important area of focus of the new VBER. The new rules make it more difficult to agree on
- dual distribution where a manufacturer sells its goods or services through independent distributors, but also itself directly to final customers; and
- parity obligations according to which a seller must offer its customer the same or better conditions than on third-party distribution channels, such as other platforms, and/or on the manufacturer’s direct distribution channels, such as its website.
As a consequence of these new rules, certain aspects of dual distribution and certain types of parity obligations are no longer covered by the new VBER and are therefore not permitted.
Transition period of 1 year
Existing contracts must be brought into line with the new VBER by 1 June 2023 at the latest. For new contracts from June 1, 2022, the new VBER will apply immediately.
More background information, such as the texts of the new VBER and related guidelines, can be found via: https://ec.europa.eu/commission/presscorner/detail/nl/IP_22_2844
How to proceed?
If you are interested in a workshop in which we can discuss these topics in more detail with you, or if you have any questions about the impact of these new rules on your company, please do not hesitate to contact us.