Online Sales and the Vertical Block Exemption Regulation (VBER) – EU Regulation 2022/720

By Avv. Margherita Barletta

On 1 June 2022, the new EU Regulation 2022/720, known as the Vertical Block Exemption Regulation (“VBER”), entered into force. The Regulation reflects the evolution of business models, now closely linked to e-commerce and online sales. Its update necessarily involved a review of the previous 2010 framework, Regulation (EU) No. 330/2010, the former VBER.

The Regulation applies to vertical agreements, namely agreements between two or more undertakings operating at different levels of the production or distribution chain, concerning the conditions under which the parties may purchase, sell or resell certain goods or services.

Article 101(1) TFEU prohibits agreements between undertakings that restrict competition. Under Article 101(3) TFEU, such agreements may nevertheless be considered compatible with the internal market if they contribute to improving the production or distribution of goods, or to promoting technical or economic progress, while allowing consumers a fair share of the resulting benefit and without eliminating competition.

The VBER provides an exemption from the prohibition under Article 101(1) TFEU for vertical agreements that meet certain conditions, thereby creating a safe harbour for such agreements. If the safe harbour is too broad, it would not be consistent with Article 101 TFEU; if it is too narrow, it would increase compliance costs for businesses.

In a press release issued last May, the European Commission explained that the new rules:

• narrow the scope of the safe harbour with respect to dual distribution, where a supplier sells its goods or services through independent distributors while also selling directly to end customers, and with respect to parity obligations, which require a seller to offer the other party terms equal to or better than those offered through third-party sales channels or through the seller’s direct sales channels. Certain aspects of dual distribution and certain types of parity obligations will therefore no longer benefit from the exemption under the new VBER and will need to be assessed individually under Article 101 TFEU;
• expand the scope of the safe harbour with respect to certain restrictions on the buyer’s ability to actively approach individual customers, namely active sales, and with respect to certain online sales practices. These include the possibility of applying different wholesale prices to the same distributor depending on whether products are sold online or offline, and the possibility of imposing different conditions for online and offline sales within selective distribution systems, provided that all other conditions for exemption are met.

The changes are extensive and affect, among other areas, exclusive distribution, selective distribution, price-setting and non-compete obligations.

For present purposes, it is useful to focus in particular on the changes concerning online sales.

Under the previous framework, the so-called equivalence principle applied, preventing suppliers from imposing criteria for online sales that differed from those applied to offline sales. Under Regulation 2022/720, the criteria imposed on distributors no longer need to be equivalent overall to those applied to physical points of sale. The only condition is that the lack of equivalence must not have the purpose of preventing online sales.

Another important development concerns dual pricing.

Under the 2010 VBER, dual pricing was considered prohibited. This approach has now changed: it is possible to set different prices for the same distributor depending on whether the sale is online or through a physical store, provided that the difference reflects the different costs of managing physical and online sales channels.

The European Commission Guidelines are particularly important for understanding the full scope of the changes introduced by the new VBER.

For further information, please contact Paula Vega at p.vega@bmvinternational.com.