Vertical agreement
Encyclopedia
A vertical agreement is a term used in competition law
to denote agreements between firms at different levels of the supply chain. For instance, a manufacturer of consumer electronics might have a vertical agreement with a retailer according to which the latter would promote their products in return for lower prices. Franchising
is a form of vertical agreement, and under European Union competition law
this falls within the scope of Article 101.
Whether a vertical agreement actually restricts competition and whether in that case the benefits outweigh the anti-competitive effects will often depend on the market structure.
. The main exception is agreements for motor vehicle distribution, which remain subject to Regulation 1400/2002 until 31 May 2013, pursuant to a three-year extension granted in Regulation 461/2010. Although this latter regulation applies Regulation 330/2010 to agreements for the repair of motor vehicles and for the distribution of spare parts as of 1 June 2013, it also supplements Regulation 330 with three additional "hardcore" clauses
Competition law
Competition law, known in the United States as antitrust law, is law that promotes or maintains market competition by regulating anti-competitive conduct by companies....
to denote agreements between firms at different levels of the supply chain. For instance, a manufacturer of consumer electronics might have a vertical agreement with a retailer according to which the latter would promote their products in return for lower prices. Franchising
Franchising
Franchising is the practice of using another firm's successful business model. The word 'franchise' is of anglo-French derivation - from franc- meaning free, and is used both as a noun and as a verb....
is a form of vertical agreement, and under European Union competition law
European Union competition law
European Union competition law arose out of the desire to ensure that the efforts of government could not be distorted by corporations abusing their market power. Hence under the treaties are provisions to ensure that free competition prevails, rather than cartels and monopolies sharing out markets...
this falls within the scope of Article 101.
Whether a vertical agreement actually restricts competition and whether in that case the benefits outweigh the anti-competitive effects will often depend on the market structure.
EU competition law: block exemptions for vertical agreements
Vertical agreements that fulfil the conditions for exemption and do not contain any so-called "hardcore restrictions" of competition are exempted from the prohibition in Article 101(3) of the Treaty on the Functioning of the European Union by Regulation 330/2010. The main exception is agreements for motor vehicle distribution, which remain subject to Regulation 1400/2002 until 31 May 2013, pursuant to a three-year extension granted in Regulation 461/2010. Although this latter regulation applies Regulation 330/2010 to agreements for the repair of motor vehicles and for the distribution of spare parts as of 1 June 2013, it also supplements Regulation 330 with three additional "hardcore" clauses