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Competition

PR(01)12: EFTA Surveillance Authority adopts Guidelines on vertical restraints

13.9.2002

The EFTA Surveillance Authority issued last week Guidelines on "Vertical Restraints" which correspond to similar Guidelines previously issued by the European Commission. 

The Guidelines complement the new Block Exemption[1], concerning vertical agreements, which took effect as of 1 June 2000 within the EEA. Vertical agreements are agreements for the sale or purchase of goods or services between companies operating at different levels of the production or distribution chain. The reform mainly concerns i.a. industrial supply agreements, exclusive and selective distribution agreements and franchising agreements. The new policy will increase the freedom to contract, especially for small and medium sized companies and generally for companies without market power. 

With the exception of a limited number of so-called ”hard core” restrictions and certain obligations, the Block Exemption allows companies whose market share is below 30% to benefit from a so-called safe harbour under the EEA competition rules. The safe harbour offers companies the freedom to create supply and distribution arrangements best suited to their individual commercial interests and to adapt to the changing economic conditions. 

The Guidelines assist companies in carrying out their own assessment under the EEA competition rules by setting out the principles for the assessment of vertical agreements under Article 53 of the EEA Agreement[2], which prohibits agreements and practices which may restrict or distort competition, by describing:

  • which vertical agreements generally do not distort competition and therefore fall outside the prohibition of Article 53 and which vertical agreements benefit from the safe harbour created by the Block Exemption;
  • which circumstances may require the benefit of the Block Exemption to be withdrawn by the Authority or EFTA States authorities;
  • a number of market definition and market share calculation issues that may arise when companies apply the 30% market share threshold for application of the Block Exemption;
  • the enforcement policy of the Authority in cases not covered by the Block Exemption. A general framework of analysis is provided and this framework of analysis is applied to the most important specific vertical restraints, such as single branding, exclusive distribution and selective distribution.

For further information please contact Mr Tormod Sverre Johansen (tel: +32-2-286 18 41).

 

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[1] A Block Exemption is a binding Act which on a general basis exempts categories of agreements from the    prohibitions in Article 53 of the EEA Agreements. 

[2] Article 53 of the EEA Agreement corresponds to Article 81 EC.




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