Economic Principles and the Reform of the European Commission’s Approach to Vertical Agreements

The European Commission recently published its evaluation results from a consultation on the Vertical Block Exemption Regulation (“VBER”) and accompanying Vertical Guidelines. The consultation identifies several aspects of the rules governing vertical agreements as warranting greater clarity and/or more specific guidance, with many areas of potential revision motivated by examples arising from the growth of e-commerce. First, we consider the key messages in the Working Document. Second, we outline five economic principles that we believe should guide the Commission’s revision of VBER and its Vertical Guidelines. We then illustrate the application of such economic principles by considering in more detail the economic analysis of two specific types of vertical agreements, resale price maintenance and most-favored nation clauses.

By Peter Davis, Gerhard Dijkstra & Vikram Kumar¹

I. INTRODUCTION

In October 2018, the Commission began its evaluation of the Vertical Block Exemption Regulation (“VBER”)² and accompanying Vertical Guidelines,³ which expire in May 2022.⁴ The results of the evaluation were published in a Staff Working Document (the Working Document),⁵ where the Commission notes that, while the VBER and Vertical Guidelines provide a useful instrument that increases legal certainty, “certain provisions… lack clarity, are difficult to apply or no longer adapted to the market developments that occurred since the adoption of the VBER and the Vert