Originally published as Covington E-Alert on April 27, 2010

 On 20 April 2010, the European Commission published new rules governing so-called “vertical” agreements, such as distribution and supply agreements. The new rules are set out in the Vertical Restraints Block Exemption Regulation and the related Guidelines (see DG Competition’s website). They will become effective as of 1 June 2010 for new agreements and as of 1 June 2011 for existing agreements. This gives companies with distribution agreements in the European Union little time to bring their agreements into line with the new rules.

Below, we highlight the key changes and their practical impact on the operations and agreements of companies operating within the European Union. The principal changes to be aware of concern the promotion and sale of products online, as the new Guidelines clarify how the general rules apply in the online context. Additionally, suppliers must now consider the market shares of their customers, as the new rules address the anticompetitive effects caused by strong buyers. Finally, suppliers now have more options to specifically tailor their distribution systems to their needs, due to the additional clarity and sophistication of the new rules.

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