Online platforms and their B2B customers might need to change their business model or contractual basis by 31 May 2023 due to the new Vertical Block Exemption Regulation ("VBER") and the accompanying new Guidelines on Vertical Restraints ("Vertical Guidelines"), both adopted by the European Commission on 10 May 2022; otherwise they may fall foul of the cartel prohibition (Article 101 TFEU). This results in contracts becoming void, the risk of fines being imposed by antitrust authorities, and the risk of civil litigation. Therefore, any undertaking operating an online platform or contracting with an online platform is strongly advised as soon as possible to review for compliance with the new rules those agreements that the platform concludes with its B2B customers for the offering or selling of goods and services ("products") via the platform.
The new rules deal extensively with online platforms, or in legal terms: online intermediation services ("OIS"), Article 1 (1) e) VBER. This includes online platforms such as e-commerce marketplaces, app stores and price comparison tools, see para. 64 Vertical Guidelines. The distribution of products via an online platform can take different forms: The platform operator acts as a dealer and sells the product in its own name and at its own risk at a price set at its own discretion (1.). Or the platform operator acts as an intermediary for the product supplier, sells the product on its behalf and receives a commission for brokered transactions (2.). Or the platform operator is "hybrid", i.e. brokers products of others on his platform and at the same time sells competing products as a dealer (3.). The new VBER does not apply if market shares exceed 30 % (4.). Platform operators must review if their contract or even their business model is still in compliance with the new rules; this is also necessary for companies that use such platforms as part of their sales strategy (5.). In this article, we will limit ourselves to the topic of online platforms; for more detailed information on how dual distribution and exclusive distribution are affected by the new VEBER we refer to arti-cles of other unyer member firms (6.).
A platform through which its operator sells products as a dealer is treated by antitrust law in the same way as before the reform, but only to the extent that the platform operator is acting as a dealer (online or offline). For such platforms, the new VBER and the Vertical Guidelines do not bring fundamental changes. This means: The platform operator (in this constellation: dealer) may set prices, territories and customer groups in his own discretion. As before, his agreements with suppliers on the prices to be applied by him when reselling via the platform are exempted only subject to conditions, as are territorial or customer restrictions; for example, the core restrictions of Article 4 VBER must be observed. Restrictions on the product supplier (in this constellation: the supplier of the dealer) are – also as before – block exempted up to a market share of 30% (unless the product supplier is a supplier of components, Article 4 f) – so far, no change in the law).
In this constellation, price, territory and customer group specifications by product suppliers continue to be exempt from the cartel prohibition. Conversely, the new VBER explicitly does not exempt from the cartel prohibition platform operators who are only intermediaries who want to restrict the price autonomy of product suppliers or define territories in which product suppliers may sell via the platform; such restrictions are hardcore restrictions. This is because in this (and only this) constellation the VBER declares the OIS to be the "contract product" and the platform to be the provider, Article. 1 (1) d) VBER. Consequently, the product supplier is the buyer of the OIS. Hardcore restrictions within the meaning of Article 4 VBER require a restriction on a buyer. Since in this constellation the product supplier by definition is a buyer, any hardcore restriction imposed on him by the platform operator results in their agreement not being block exempted.
The platform operator may prohibit product suppliers from offering their products on their own online presence at a price lower that that on the platform. However, he may not impose a most-favoured-nation clause which prevents the product from being offered more cheaply on other platforms (prohibition of "cross-platform MFN"), Article 5 (1) d) VBER. Although such an agreement is not a hardcore restriction within the meaning of the VBER, it is nevertheless not block exempted.
An undertaking is hybrid if it operates a platform on which it brokers products of other undertakings while at the same time it buys or sells competing products as a dealer. Agreements between hybrid platform operators and product suppliers who want to sell via this platform are not covered by the block exemption, Article 2 (6) VBER, and need to be assessed on a case-by-case basis, irrespective of market shares. In the course of such an assessment it might become problematic to argue that the product supplier is still allowed to impose price restrictions on the platform operator when selling the supplied product. In the Commission's view, such agreements can generally no longer be regarded as so-called agency agreements, but fall under the cartel prohibition. Therefore, in the future, only the individual exemption pursuant to Article 101 (3) TFEU can apply to such agreements. In each individual case, the effects on competition (including possible horizontal effects) as well as possible efficiency gains and the passing on of benefits to customers must be examined.
If the market share exceeds 30%, all agreements between the operator of a platform and the product supplier who wants to sell his product via the platform are not block exempted. Therefore, in such constellations the conditions of the individual exemption have to be examined: effects on competition (including possible horizontal effects), possible efficiencies and the passing-on of benefits to customers.
While it is clear from the new Vertical Guidelines that the European Commission will most likely not press for enforcement of the new rules if the vertical agreement does not contain hardcore restrictions or the platform does not have significant market power, a breach of antitrust law can have many more consequences than "just" an investigation by the European Commission. In particular, a platform operator will not want its business to be based on contracts that are not legally effective, especially since the courts, those of the EU and the Member States, are by no means bound by the Vertical Guidelines. It is completely irrelevant for the courts whether an antitrust violation has an enforcement priority for the European Commission or not. Moreover, the national competition authorities are bound by the VBER, but not by the Guidelines, and obviously do not have to pursue the same enforcement priorities as the European Commission.
Therefore, operators of hybrid platforms and their business partners, in particular, will have to review their contracts (and perhaps their business model) before 31 May 2023 and adapt if necessary. Companies that use OIS to sell their products must at least check whether the platform operator sells competing products via its platform as a dealer in order to assess whether their agreements benefit from the block exemption.
For further aspects of the new distribution antitrust law, see:
- "Dual Distribution and Information Exchange" (Pirola Newsletter)
- "Exclusive Distribution Agreements" (Fidal)
Dr Helmut Janssen, LL.M. (King's College London)
+32 2 627 7763 / +49 211 5660 18763 / +49 1520 16 18763
Anne Caroline Wegner, LL.M. (European University Institute)
+49 211 5660 18742
Martin Lawall, LL.M. (University of Glasgow)
+32 2 627 7767