COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY OF THE EVALUATION of the Vertical Block Exemption Regulation
Date: 2020-09-08
Institutions: Directorate-General for Competition, European Commission
Subjects: EU competition policy, application of EU law, electronic commerce, inter-company agreement, restriction on competition, vertical agreement

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   EUROPEAN COMMISSION  Brussels, 8.9.2020  SWD(2020) 173 final  COMMISSION STAFF WORKING DOCUMENT  EXECUTIVE SUMMARY OF THE EVALUATION  of the  Vertical Block Exemption Regulation {SWD(2020) 172 final}  
 
 
Background and Objectives  

EU competition law aims to prevent competition from being distorted to the detriment of the 
public  interest,  individual  undertakings  and  consumers.  Article  101  of  the  Treaty  thus 
prohibits  agreements  that  restrict  competition.  As  an  exception  to  this  rule,  agreements  that 
restrict competition are not prohibited if they improve the production or distribution of goods 
or  promote  technical  or  economic  progress,  while  allowing  consumers  a  fair  share  of  the 
resulting  benefits.  These  conditions  are  set  out  in  Article  101(3)  of  the  Treaty.  The 
Commission  applies  Article  101  of  the  Treaty  in  parallel  with  the  national  competition 
authorities and national courts. 

Under the existing legal framework, businesses have to self-assess whether their agreements 
comply  with  Article  101  of  the  Treaty.  The  assessment  under  Article  101  consists  of  two 
steps.  The  first  step,  under  Article  101(1),  is  to  check  whether  an  agreement  restricts 
competition.  The  second  step,  under  Article  101(3),  is  to  determine  the  pro-competitive 
effects produced by that agreement and to check whether they outweigh the restrictive effects 
on competition. 

Vertical  agreements  are  agreements  that  relate  to  the  supply  and  distribution  of  goods  and 
services.  They  are  ubiquitous  across  the  EU  economy.  The  Commission  made  use  of  the 
empowerment  granted  by  the  Council  to  adopt  a  Vertical  Block  Exemption  Regulation 
(“VBER”) covering these vertical agreements.  

The VBER declares that if vertical agreements meet certain conditions, then the prohibition in 
Article  101(1)  of  the  Treaty  does  not  apply  to  them.  The  VBER  therefore  creates  a  safe 
harbour  for  those  agreements.  Together  with  the  VBER,  the  Commission  also  adopted 
Guidelines (“Vertical Guidelines”). These provide guidance on how to interpret and apply the 
VBER and how to assess vertical agreements that the VBER does not exempt. 

The general objective of the VBER and the Vertical Guidelines is to facilitate the enforcement 
work  of  the  Commission,  as  well  as  the  work  of  the  national  competition  authorities  and 
national  courts,  and  to  help  businesses  conduct  the  self-assessment  of  their  vertical 
agreements, thus reducing costs. 

The VBER and the Vertical Guidelines have three specific objectives. First, they aim to make 
it easier for businesses to self-assess their agreements by providing legal certainty. Since the 
VBER exempts all agreements that meet its conditions, businesses no longer need to perform 
the two-step assessment under Article 101 of the Treaty for those agreements. They only have 
to assess whether the agreement meets the conditions set out in the VBER. Second, the VBER 
aims to avoid false positives and, to the extent possible, false negatives. This means that the 
VBER aims to exempt only those agreements that meet the conditions of Article 101(3) of the 
Treaty,  in  order  to  be  in  line  with  the  Treaty  and  the  requirements  of  the  empowerment 
granted  by  the  Council.  At  the  same  time,  to  reduce  the  burden  for  businesses  when  self-
assessing the compliance of their agreements with Article 101 of the Treaty, the VBER also 

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aims to exempt as many agreements that meet the conditions of Article 101(3) of the Treaty 
as  possible.  Third,  the  VBER  and  the  Vertical  Guidelines  aim  to  provide  a  common 
framework of assessment for national competition authorities and national courts, in order to 
ensure consistency in the application of Article 101 of the Treaty. 

The VBER expires on 31 May 2022. In view of this, the purpose of the evaluation is to gather 
evidence on the functioning of the VBER, together with the Vertical Guidelines, in order for 
the Commission to decide whether it should let the VBER lapse, renew or revise it.  

To  carry  out  the  evaluation,  the  Commission  drew  on  multiple  sources  of  information  and 
consulted  extensively  with  stakeholders.  It  carried  out  a  public  consultation,  a  targeted 
consultation  of  national  competition  authorities,  a  stakeholder  workshop  and  an  external 
evaluation  support  study.  The  Commission  also  relied  on  evidence  gathered  from  its 
enforcement  experience  and  that  of  national  competition  authorities,  as  well  as  other 
initiatives, such as the e-commerce sector inquiry. 

Main findings 

The  evaluation  confirmed  the  need  for  a  block  exemption  and  guidance  on  how  to  apply 
Article 101 of the Treaty to vertical agreements. Stakeholders unanimously confirmed that the 
VBER and the Vertical Guidelines are relevant, as they are useful tools that greatly facilitate 
the self-assessment of vertical agreements. 

However, the evaluation has also  shown that the market  has significantly changed since the 
adoption of the VBER  and the Vertical  Guidelines.  In particular, the  growth of online sales 
and online platforms has had a significant impact on distribution models. The evolving nature 
of platform business models has led to an increase in the number of contractual relationships 
and the increased use of vertical agreements. At the same time, consumers nowadays expect 
to have a continuous omni-channel experience across a variety of different channels such as 
offline and online shops, marketplaces and other  online platforms. This  has led suppliers to 
increase  the  number  of  different  distribution  and  sales  channels  they  use  to  promote  their 
products  and  services.  Stakeholders  therefore  need  rules  that  help  assess  the  vertical 
agreements and restrictions they use nowadays, in light of these market developments.  

The evidence gathered in the evaluation, however, suggests that the specific objectives of the 
VBER,  together  with  the  Vertical  Guidelines,  have  not  been  fully  met.  In  particular,  the 
evidence  gathered  in  the  evaluation  suggests  that  there  is  scope  for  improving  the  level  of 
legal certainty provided by the rules. Addressing the areas of the rules where the evaluation 
has identified a lack of clarity or gaps, and the areas where the rules are no longer adapted to 
recent market developments would improve legal certainty, as well as the ability of the rules 
to  provide  a  common  framework  of  assessment  for  national  competition  authorities  and 
national  courts.  Moreover, while the evidence suggests that the lists of hardcore restrictions 
and excluded restrictions are generally appropriate, there may still be scope in some areas of 
the rules to further reduce the risk of false negatives. 

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The benefits of the VBER are inherently difficult to quantify, as are the costs of applying the 
VBER. The evidence gathered during the evaluation has not allowed to  make a quantitative 
comparison  of  costs  and  benefits.  However,  it  shows  that  the  costs  would  increase  in  the 
absence  of  the  VBER  and  Vertical  Guidelines,  especially  for  small  and  medium-sized 
enterprises  (“SMEs”).  Moreover,  the  evidence  suggests  that  there  is  significant  room  for 
simplification and further cost reduction, notably by reducing the complexity of the rules and 
by updating the rules in order to bring them in line with the current needs. 

The VBER and the Vertical Guidelines are overall coherent both with other Commission rules 
and  guidance  on  the  application  of  Article  101  of  the  Treaty,  as  well  as  with  other  EU 
legislation with relevance for vertical supply and distribution agreements. The VBER and the 
Vertical Guidelines also provide clear EU added value, as they offer a safe harbour, which can 
only be granted at EU level. 

Nonetheless,  the  evaluation  has  identified  a  number  of  issues,  in  particular  as  regards  the 
clarity  of  the  rules  and  their  ability  to  address  new  market  developments,  which  limit  their 
effectiveness, efficiency and coherence. 

Follow-up 

The evaluation identified a number of areas of the rules that are not  functioning well, or as 
well as they could, for various reasons. The main issues raised relate to the fact that the VBER 
and the Vertical Guidelines are not well adapted to new market developments that took place 
since the adoption of the rules. Any follow-up to address these issues, however, is subject to 
an  impact  assessment,  also  taking  into  account  the  implementation  costs  of  any  possible 
changes.  

In  addition  to  the  areas  of  the  rules  identified  as  requiring  follow-up,  the  evaluation  also 
pointed to some more general issues, which need to be taken into account when considering 
the next steps: 

First,  there  is  a  need  for  rules  that  are,  to  the  extent  possible,  future-proof.  This  means  that 
they  should  not  only  address  known  issues  but  also  contain  bright-line  principles  that  can 
cater for possible new types of vertical agreements and restrictions. 

Second, there is a need to address the complexity of the rules, which reduces legal certainty 
and makes the rules challenging to use, especially for SMEs. 

Third, the fact that national competition authorities and national courts have taken divergent 
approaches  in  some  areas  has  affected  the  benefit  of  providing  a  common  framework  of 
assessment. While there  are already mechanisms  that aim to  overcome these divergences, it 
may be necessary to consider further options to limit the impact of this issue. 

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