Vertical Agreements Exclusivity

The vertical class exemption requires that the agreement in question be vertical (i.e., the parties operate at different market levels „for the purposes of the agreement“). Parties to an agreement that compete in other product markets and not in the contract market may benefit from the vertical class exemption, provided they are not both „real and potential competitors“ in the market that includes contract products. The Commission abolished its formal system of advance notification as part of the „modernization reforms“ implemented by Regulation 1/2003 on 1 May 2004. Therefore, notification of a vertical agreement is neither necessary nor, in general, desirable, subject to the possibility of making informal requests for advice in new cases (see question 48). In this regard, companies are now required to decide for themselves whether an agreement restricts competition within the meaning of Article 101, paragraph 1, and, if so, whether it can benefit from an exemption under Article 101, paragraph 3. Article 101 may apply to vertical restrictions (as defined in question 2) unless they are: a vertical agreement is a term used in competition law to refer to agreements between companies operating at different levels of the production and distribution chain (for example. B, relationships between producers and their customers/distributors). On the merits, in Karen Murphy/Media Protection Services (2011), the ECJ examined whether distribution agreements between broadcasters who licensed Football Association Premier League content did not violate Article 101. The agreements required broadcasters to encrypt their signals in order to prohibit access to games to potential customers outside the territory of broadcasters. The European Court of Justice found that agreements to prohibit or restrict the provision of cross-border services were useful in restricting competition, unless other circumstances warrant that such an agreement is not likely to affect competition. As a general rule, the Commission will take into account the cumulative effects of a particular supplier`s agreements on a market in question when assessing the effects of a vertical restriction of competition. In addition, the assessment of a certain vertical restriction may vary depending on the vertical restrictions that are closed by the supplier`s competitors.

Where the vertical restrictions imposed by the supplier and its competitors have the cumulative effect of excluding other parts of the market in question, any vertical restrictions that contribute significantly to this exclusion may be contrary to section 101. This type of analysis has been frequently used for the brewing industry.