News & Positions

New rules on distribution agreements give brands welcome additional flexibility

Brussels – 9 June 2022 – AIM, the European Brands Association, welcomes the new EU competition rules for vertical agreements (“the new rules”) that the European Commission published on 10^th May 2022. Overall well-grounded and substantiated, the new rules are the product of considerable work and consultation with external stakeholders since 2018, and AIM commends the European Commission for this successful outcome. Notably revised to reflect current market realities, in particular the recent developments in e-commerce, the new rules provide more flexibility for, and better protection of, a wide range of distribution systems, which will allow suppliers to adapt more quickly to ever-changing consumer needs.

Important changes were brought to the rules governing dual distribution, online sales restrictions, territorial and customer restrictions, and resale price maintenance. Brands particularly welcome that:

• “Dual pricing” and “non-equivalent online and offline criteria in a selective distribution system” are no longer treated as hardcore restrictions.
• The new rules on territorial and customer restrictions bring flexibility to design and structure distribution models, monitor sales, and pass on permitted restrictions to the customers of distributors.
• Exclusive distribution systems (“EDS”) now enjoy additional flexibility thanks to the exemption of “shared exclusivity” for a group of maximum five distributors for the same territory or customer group.
• The new rules explicitly reconfirm that selective distribution systems (“SDS”) are block exempted regardless of the nature of the products or the type of selection criteria (qualitative and/or quantitative), and that publication of these selection criteria is not required. Suppliers can now better protect their SDS by prohibiting exclusive or open distributors in non-SDS territories from actively and passively selling to unauthorised resellers in territories where they operate a SDS.
• A new exemption to the prohibition of resale price maintenance has been included: the possibility to use a minimum resale price or minimum advertised pricing to address loss leader conduct.

Brands however regret:

• The more restrictive approach to information exchanged in dual distribution situations, which will give rise to unnecessary legal uncertainty and complexity for brands.
• The introduction of a new hardcore restriction of “preventing the effective use of the internet”, which may give rise to differences in interpretation and result in unwelcome and unnecessary legal uncertainty.