New EU rules for Online Sales
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The European Commission has recently adopted the new Vertical Restraints Block Exemption Regulation and Guidelines (VRBE). These rules came into force on 1 June 2010 but provide for a one year transitional period for existing agreements. They will remain in force for a period of 12 years. The new VRBE reflects developments in the past 10 years, most notably the growth of the internet as a tool for online sales.
The regulation exempts a wide range of vertical agreements from the prohibition on agreements that restrict competition. It does not apply to agreements containing ‘hardcore restrictions’ whose ‘object is to segment markets to the detriment of consumers’.
The new rules address the question of online sales. The guidelines provide examples of restrictions online that would be considered ‘hardcore’ restrictions. These include agreements requiring a distributor to:
(a) prevent customers located in another territory from viewing its website or automatically rerouting its customers;
(b) terminate a transaction over the internet once credit card data reveals an address that is not within the distributor’s territory;
(c) limit the proportion of overall sales made over the internet - this does not exclude a supplier requiring a buyer to sell at least a certain amount of products offline in order to ensure an efficient operation of its brick and mortar shop; and
(d) pay a higher price for products intended to be resold by the distributor online, than for products intended to be resold offline.
