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ITALY - NEW RULES FOR DISTRIBUTION: THE REFORM OF ANTITRUST RULES ON VERTICAL AGREEMENTS



The new EU Regulation 2022/720 on vertical agreements (hereinafter “VBER”) came into force on 1 June 2022, replacing the previous EU Regulation 330/2010, which expired on 31 May 2022.


The VBER, like all previous regulations on the subject, aims to identify the categories of vertical agreements, i.e. agreements between parties placed on a different level of the commercial chain (e.g. manufacturer and distributor), which benefit from the exemption of Article 101(3) of the Treaty on the Functioning of the EU, pursuant to which an agreement entered into between two companies and potentially restrictive of competition is valid by default, without a concrete assessment of the case, when it contributes to improving the production or distribution of a product or to promoting the economic growth of the market.


Compared to the previous framework, the VBER regulates ex novo certain legal aspects which, in view of the economic developments that have affected the European and international market in recent years such as the explosion of the e-commerce phenomenon, shall be properly regulated and not too open to jurisprudential interpretations.


Many of VBER proposed innovations aim in fact at levelling the distinctions in the application of antitrust regulations to the vertical agreements in force between players using offline sales channels, increasingly stiffened by rules incentivising competition and the free market, and online sales channels, generally viewed favourably by European authorities since they are considered passe-partout in the hands of customers and constantly threatened by producers of goods or services willing to harness transnational sales.


For this reason, the VBER, also by means of the relevant guidelines, intervenes clearly on the subject of competition between platforms, preventing the latter from prohibiting companies that use their service from offering, selling or reselling their goods on other competing platforms at more favourable conditions (so-called wide retail parity obligation), but also on the subject of possible openings or restrictions that may be imposed on distributors willing to open up to online trade.


In this sense, VBER: (i) no longer identifies dual pricing as a prohibited practice, i.e., the commercial policy of selling the same good, online and offline, at two different prices; (ii) allows the use of two different commercial practices for the sale of products online and offline by distributors belonging to a selective distribution web; (iii) allows the imposition by manufacturers of specific restrictions on the use of third-party marketplaces on their distributors (subject to certain conditions).


Clearly, the policies summarised above, allowed under VBER, automatically lose the privilege of exemption under Article 101(3) of the Treaty on the Functioning of the EU if they are imposed for the sole purpose of preventing tout court the use of the internet.


Furthermore, the VBER, in defining online intermediation services for the first time, clarifies that vertical agreements relating to the provision of such services, containing price-fixing and/or exclusivity clauses and where the supplier is a company competing on the relevant market for the sale of the goods or services being intermediated, are excluded from the application of the exemption of Article 101(3) of the Treaty on the Functioning of the EU.


In addition to the above, the VBER has also regulates more traditional issues, including, inter alia:


  1. dual distribution, i.e. the practice whereby the producer of a good or service competes with its own distributor, by prohibiting the exchanges of information that these parties carry out within the framework of their agreement, where these affect competition;

  2. exclusive distribution, allowing manufacturers to appoint up to 5 exclusive distributors for the same territory or portfolio of customers and the right to prevent active sales to other distributors;

  3. selective distribution, i.e. by allowing a manufacturer to use different distribution systems between different Member States and, in this case, to protect distributors belonging to the network and located in a Member State from active and passive sales by exclusive or free distributors;

  4. the non-compete obligation, admitting the validity of a covenant of this nature with a duration of more than 5 years if the distributor is given a reasonable period for withdrawal or renegotiation;

  5. the dual role, i.e. the case in which a party acts simultaneously as a distributor and an agent, by better defining the cases in which the VBER rules apply.

In light of the innovations listed above, it is therefore necessary for companies that base their economy on a distribution system, be it offline or online, to review the contractual terms currently in place with their commercial intermediaries, in order to avoid the possible application of sanctions by the market competition authority.


For the purpose thereof, Article 10 of the VBER provides for a transitional period of 1 year, expiring on 31 May 2023, during which companies have the opportunity and time to implement the changes introduced by the new regulation in their commercial chain.

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