Developments in Distribution

On July 30, 2009, the European Commission published for consultation a new draft Vertical Restraints Block Exemption Regulation and accompanying guidelines governing distribution arrangements between suppliers and retailers. The current Block Exemption, which exempts certain forms of distribution agreements from the application of Article 101(1) TFEU, expires on May 31, 2010 and the Commission appears committed to establishing revised rules. The proposals circulated largely confirm and renew the existing rules. However, some of the new proposals, if adopted, would have significant implications for physical and online distribution. In particular, the draft proposals are notable insofar as they: indicate that purchasers with significant market shares would no longer benefit from exemption under the rules; clarify the (albeit limited) circumstances/instances where restrictions otherwise viewed as "hard core" - namely resale price maintenance - might satisfy the criteria for exemption under Article 101(3)TFEU; and provide greater clarity to both suppliers and retailers regarding permissible restrictions on sales made via the internet.

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