Part I Introduction, 1 Introduction

This chapter explains the term ‘vertical agreements’ and what it covers. It addresses a number of general issues that are relevant to the EU competition law treatment of vertical agreements in general. It describes the implementation and the (public and private) enforcement of Article 101 TFEU before and after the entry into force of Regulation 1/2003. The chapter provides the historical background of both Regulation 330/2010 and Regulation 461/2010. In particular, it devotes specific attention to the nature and legal and practical consequences of soft EU competition law (in the form of notices, guidelines, etc) as opposed to hard EU competition law (provisions of primary and secondary EU law).

Part II Vertical Agreements Under Regulation 330/2010, 6 Article 4: Hardcore Restrictions

This chapter addresses the hardcore restrictions which are included in Article 4 of Regulation 330/2010. Once it has been established that a vertical agreement falls within the scope of application of Regulation 330/2010, complies with the limitations included in Article 2(2)–(5), and does not exceed the market share limits, the next step is to check whether it contains any hardcore restrictions. This assessment constitutes the eleventh step of the analysis.The hardcore restrictions consist of RPM and certain territorial and customer restrictions. For the purposes of Regulation 330/2010, the list of hardcore restrictions in Article 4 is exhaustive. The inclusion of a hardcore restriction renders the block exemption inapplicable to the vertical agreement as a whole. In addition, the Vertical Guidelines provide for a rebuttable presumption that a hardcore restriction will fail to meet the conditions of Article 101(3) TFEU on an individual basis (self-assessment).

Part II Vertical Agreements Under Regulation 330/2010, 5 Article 3: Market Share Threshold

This chapter discusses the market share limits that determine the applicability of Regulation 330/2010. Each of the supplier and the buyer must in principle remain below an individual limit of 30 per cent. In order to assess the market share limits, the chapter addresses the following steps of the analysis: (i) ninth step: definition of the relevant market; and (ii) tenth step: calculation of the market shares. It concludes by addressing the concrete and practical application of the market share limits in accordance with Regulation 330/2010 and offers easy-to-read overview tables illustrating the effect of changes in the market share levels over time.

Part IV Motor Vehicle Distribution, 11 Motor Vehicle Distribution

This chapter addresses the specific block exemption regime that applies to the automotive industry. The relevant regime is contained in Regulation 461/2010. Different from past practice, Regulation 461/2010 closely resembles the general block exemption (Regulation 330/2010) and limits itself to adding certain hardcore restrictions applicable in the secondary markets. The chapter provides an overview of the impact of the block exemption from the perspective of the various stakeholders active in the sector. It then goes on to describe separately the block exemption principles governing the distribution of motor vehicles, the provision of after-sales services, and the distribution of spare parts.

Part II Vertical Agreements Under Regulation 330/2010, 3 Article 2(1): Scope of Application of regulation 330/2010

This chapter covers Article 2(1) of Regulation 330/2010 reflecting the broad material scope of application of Regulation 330/2010. In order to determine whether a given practice meets the requirements of Article 2(1) of Regulation 330/2010, the following steps must be included in the assessment: (i) first step: two or more undertakings must be involved; (ii) second step: the practice must qualify as a vertical agreement; (iii) third step: the vertical agreement must affect trade between Member States; and (iv) fourth step: the vertical agreement must contain vertical restraints. The chapter takes the reader systematically through each of these steps and offers concrete and practical guidance.

Part II Vertical Agreements Under Regulation 330/2010, 2 Road Map

The objective of this chapter is to provide the practitioner with a road map covering the various steps and questions to assess whether a given vertical agreement benefits from Regulation 330/2010. Experience teaches that one must not conclude too hastily that a vertical agreement falls within the scope of application of Regulation 330/2010 or meets the conditions to be block exempted. A step-by-step assessment is called for to avoid the risk of inaccurate conclusions. The chapter takes the reader by the hand and guides him systematically through the various steps that need to be covered so as to arrive at reliable conclusions regarding the applicability of the block exemption regime.

Part II Vertical Agreements Under Regulation 330/2010, 4 Article 2(2)–(5): Limits to the Scope of Application of Regulation 330/2010

This chapter addresses certain specific limitations to the scope of application of Regulation 330/2010. In order to determine whether any of these limitations applies and therefore excludes the vertical agreement from the scope of application of Regulation 330/2010, the following additional steps must be addressed: (i) fifth step: Article 2(2) limits the scope of application to only certain agreements between associations of undertakings and their members of suppliers; (ii) sixth step: Article 2(3) addresses the (limited) application of Regulation 330/2010 to vertical agreements containing provisions on IPR; (iii) seventh step: Article 2(4) deals with the application to certain agreements between competitors; and (iv) eighth step: Article 2(5) limits the scope of application to vertical agreements which are not within the scope of application of any other block exemption regulation. The chapter takes the reader systematically through each of these steps and offers concrete and practical guidance.

Part III Vertical Agreements Outside Regulation 330/2010, 10 Economics and Self-Assessment of Vertical Agreements

This chapter addresses vertical agreements outside the scope of Regulation 330/2010 on account of the market shares of the parties. Regulation 330/2010 applies only to vertical agreements between parties that each do not exceed a market share limit of 30 per cent. Such parties must conduct a self-assessment to determine whether their agreements fall within the scope of Article 101(1) TFEU and, if they do, whether they meet the conditions for exemption stated in Article 101(3) TFEU. The Vertical Guidelines commands a case-specific approach. This chapter repeats the overarching principles that apply to every self-assessment; describes the framework of analysis suggested by the Vertical Guidelines; summarizes the positive and negative effects of vertical restraints and presents the economic thinking that is underpinning the competition law treatment of vertical restraints; and finally summarizes the pointers contained in the Vertical Guidelines with respect to certain distribution formulas and certain vertical restrictions.

Part II Vertical Agreements Under Regulation 330/2010, 7 Article 5: Excluded Restrictions

This chapter addresses the co-called excluded restrictions which are listed in Article 5 of Regulation 330/2010. The twelfth step of the road map of Chapter 2 is to check whether a given vertical agreement contains restrictions which are excluded from the scope of application of Regulation 330/2010. The excluded restrictions cover three categories of non-compete obligations, respectively applying: (i) during the term of the vertical agreement; (ii) after its termination; and (iii) in a system of selective distribution.The inclusion of an excluded restriction does not render the block exemption inapplicable to the vertical agreement as a whole. The block exemption will only not apply to the excluded restriction itself. The other restrictions of competition continue to benefit from the block exemption, to the extent that they are covered by it.

Part II Vertical Agreements Under Regulation 330/2010, 8 Article 6 (Non-Application) and Article 29 Regulation 1/2003 (Withdrawal)

This chapter addresses the withdrawal or disapplication of Regulation 330/2010. It describes the relevant procedures and the powers of both the European Commission and the national competition authorities in this respect. Non-application occurs by Commission regulation in cases where parallel networks of similar vertical restraints cover more than 50 per cent of the relevant market. Withdrawal occurs by the Commission or an NCA when vertical agreements satisfying the conditions for a BER but nonetheless produce effects on competition that are incompatible with Article 101 TFEU.