Breach of competition law is serious - with huge fines, unenforceable agreements, third parties suing, bad PR, dawn raids and massive disruption. Certain restrictions are exempt, and the rules have recently changed.
Under EU competition law, agreement, decisions or concerted practices which have as their object or effect the prevention, restriction or distortion of competition and which may affect trade between EU Member States are prohibited unless an exemption applies (Article 81 of the Treaty on the Functioning of the European Union). The UK has an almost identical regime under the Chapter I Prohibition of the Competition Act 1998, except the impact is on trade within the UK.
There are certain block exemptions that apply to permit certain types of restriction in most case. An important one that affects people supplying or obtaining goods or services to or from someone else at a different level of the supply chain, is the Vertical Agreements Block Exemption Regulation (VBER) from 2010. VBER applied to both the EU and UK competition regimes, and expired on 31 May 2022.
The European Commission and the UK's Competition and Markets Authority have been looking into what regime to have following the expiry of VBER. With effect from 1 June 2022, the EU and UK have introduced new block exemptions. On 10 May 2022, the European Commission published the final details of the revised VBER, and accompanying updated Guidelines on vertical restraints (Guidelines). Meanwhile, the UK has published a new Competition Act (Vertical Agreements Block Exemption) Order 2022 and an Explanatory Memorandum.
Any existing agreements have a one year grace period and can still follow the 2010 regime until 31 May 2023, by which time they must be updated.
The good news is that many of the provisions in both the new EU and UK block exemptions follow the 2010 VBER. However, there are some changes:
In more good news for business, particularly those who trade in the UK and Ireland (and therefore will need to have agreements that reflect both the UK and EU regimes), the new UK and EU block exemptions follow extremely similar paths. There are some small nuanced differences that need to be carefully considered, but essentially the new regimes are extremely similar.
Here is a top level summary of the main differences from the 2010 VBER:
The UK's Order lasts for six years, until 31 May 2028; the EU's new VBER lasts for 12 years, to 31 May 2034.
Any new agreements that may relate to trade anywhere in the UK or EU must follow the new regimes. In addition, it is worth dusting down those existing agreements to see what may need to change by May 2023. If there is anything that could potentially be anti-competitive, it may or may not be acceptable. If your agreement fails to comply with the new regimes under the EU and UK competition law, that could lead to severe consequences, including fines of up to 10% of your total turnover, third parties suing, the agreement being unenforceable, and huge inconvenience.