WRITTEN QUESTION E-1995/99

by Paul Rübig (PPE-DE) to the Commission

(9 November 1999)

Subject: Guidelines on vertical restraints

At the hearing in the EP's Committee on Economic and Monetary Affairs the new Commissioner for competition emphasised the importance of transparency and clarity for the acceptance of EU legislation by the citizen.

The draft guidelines on vertical restraints contain 225 individual points and highlight examples which cannot always be generalised.On the other hand,the extensive discussion of the relevant market still fails to include a clarification which would prevent producers in the smaller Member States from being disadvantaged.

How does the Commission plan to create the greatest possible transparency in this area and to devise solutions which avoid the feared disadvantages?

Answer given by Mr Monti on behalf of the Commission

(29 November 1999)

The Honourable Member refers to the draft guidelines on vertical restraints that the Commission published, together with a draft block exemption regulation, on 24 September 1999(1).

The Commission considers that the new proposed policy will considerably simplify the rules applicable to vertical restraints and reduce the regulatory burden, as it will enable companies which lack market power (and most companies lack market power) to benefit from a safe harbour within which it will be no longer necessary for them to assess the validity of their agreements under the Community competition rules. In accordance with this new approach, the proposed block exemption regulation covers up to a market share threshold set at 30 % all vertical restraints concerning both intermediate and final goods, as well as services, except for a limited number of hardcore restraints and conditions. This removes certain major shortcomings in the three existing block exemption regulations concerning exclusive distribution, exclusive purchasing and franchising agreements, which have been widely criticised in recent years for being too narrow in scope, over formalistic in their approach and for imposing on industry a strait-jacket incompatible with the evolution of production and distribution methods. The simplification brought about by the new proposed policy will in particular benefit small and medium-sized enterprises (SMEs), which will be largely covered by the new regulation.

While companies with market shares above the 30 % threshold will not benefit from the safe harbour, it must be stressed that, pursuant to the new policy, their vertical agreements will not be presumed illegal but may require an individual examination under Article 81 (ex-Article 85) EC Treaty. The accompanying guidelines are designed to assist undertakings in carrying out such an examination and thus to increase the effectiveness of the competition rules.

In drafting these guidelines, the Commission has tried to give a detailed and comprehensive overview of a technically complex matter. In particular, this text contains a chapter dealing with market definition issues, which is based on the general criteria provided in the Commission's notice on market definition of 1997 and which is designed to offer companies more specific guidance on problems that arise in the context of vertical restraints.

The guidelines have been published in the Official journal as a draft in order to give all interested parties the opportunity to present their comments, which will enable the Commission to introduce, where appropriate, possible improvements and clarifications.

As to the issue of market definition, it should be recalled that the relevant anti-trust market does not necessarily coincide with a Member State's territory and can be assessed only on a case-by-case basis. The possible negative and positive effects of vertical agreements have to be assessed on the relevant market in question. Far from entailing a disadvantage for producers in smaller markets, the Community competition policy aims at protecting competition and consumers' interests no matter how wide or small the relevant market in geographic terms.

(1) OJ C 270, 24.9.1999.