Competition Law

KEY POINTS

Conditions for the application of the regulation

The regulation applies to vertical agreements on the condition that:

the supplier and the buyer each have a market share not exceeding 30%; and

 the vertical agreement does not contain certain severe restrictions on

 competition (hardcore restrictions).

Hardcore restrictions

If a vertical agreement includes any of the following severe restrictions on

competition, the whole agreement is excluded from the block exemption:

restrictions on a buyer’s ability to determine its sale price, although the supplier

 may impose a maximum sale price or recommend a sale price;

restrictions on the territory in which, or the customers to whom, the buyer may

 sell goods or services covered by the vertical agreement, subject to certain

exceptions that enable the supplier to operate exclusive or selective distribution

systems;

restrictions of cross-supplies between the members of a selective distribution

 system;

restrictions that prevent the buyer from making effective use of the internet to

 sell goods or services covered by the vertical agreement;

restrictions on the ability of a supplier of components to sell them as spare parts

 to end users, repairers, wholesalers or other service providers.

Excluded restrictions

The regulation excludes the following restrictions from the block exemption:

non-compete obligations* that are indefinite or that exceed 5 years’ duration;

 obligations on the buyer not to manufacture, buy or sell goods or services after

 the termination of the agreement;

not allowing members of a selective distribution system to sell competitors’

 brands;

obligations on the members of a selective distribution system not to sell the

 brands of particular competing suppliers;

obligations on buyers of online intermediation services not to offer goods or

 services to end users on more favourable terms via competing online

intermediation services.

Although these restrictions are excluded from the block exemption, the rest of the

vertical agreement can continue to benefit from that exemption, provided that it can

operate without the excluded restrictions.

Withdrawal of the benefit of the block exemption

The European Commission and the competition authorities of the Member States may

withdraw the benefit of the block exemption in individual cases where they find that

particular vertical agreements nonetheless have effects that are incompatible with

Article 101(3) TFEU.

Guidance

The Commission has also published guidelines on vertical restraints (see summary).

These provide guidance to help companies interpret the regulation and to assess the

compliance with Article 101 TFEU of vertical agreements that do not benefit from the

block exemption.

FROM WHEN DOES THE REGULATION APPLY?

It has applied since 1 June 2022 and expires on 31 May 2034.

 Vertical agreements that do not meet the conditions of the regulation, but which

 were already in force on 31 May 2022, and that met the conditions of the

previous block exemption regulation for vertical agreements (Regulation (EU)

No 330/2010 – see summary) benefit from a transitional period that expires on

31 May 2023.

BACKGROUND

Certain vertical agreements can improve economic efficiency in a production or

 distribution chain, by facilitating coordination between suppliers and buyers. For

example, they can help suppliers and buyers to reduce their costs and increase

their sales and investments.

For further information, see:

 Antitrust: Commission adopts new vertical block exemption regulation and

 vertical guidelines – press release (European Commission).

KEY TERMS

Vertical agreement. An agreement or arrangement between two or more

undertakings operating at different levels of the production or distribution chain

relating to the conditions under which they buy or sell goods or services.

Non-compete obligation. An obligation on a buyer not to manufacture, buy or sell

goods or services that compete with goods or services covered by the vertical

agreement, or an obligation to buy more than 80% of the buyer’s total purchases of

such goods or services or their substitutes from the supplier or from a company

designated by the supplier.

MAIN DOCUMENTS

Commission Regulation (EU) 2022/720 of 10 May 2022 on the application of Article

101(3) of the Treaty on the Functioning of the European Union to categories of vertical

agreements and concerted practices (OJ L 134, 11.5.2022, pp. 4–13).

Consolidated version of the Treaty on the Functioning of the European Union – Part

three – Union policies and internal actions – Title VII – Common rules on competition,

taxation and approximation of laws – Chapter 1 – Rules on competition – Section 1 –

Rules applying to undertakings – Article 101 (ex Article 81 TEC) (OJ C 202, 7.6.2016,

pp. 88–89).

De minimis rule – exemption of small amounts of State aid from

notification (from 2024)

WHAT IS THE AIM OF THE REGULATION?

Article 107(1) of the Treaty on the Functioning of the European Union (TFEU) sets out which measures constitute State aid.

Article 108(3) TFEU requires, as a general principle, State aid to be notified to the European Commission so that it can assess

whether the aid is compatible with the single market.

The regulation sets out the conditions that small amounts of State aid must meet to avoid having to be notified to the

Commission.

KEY POINTS

Scope

The regulation applies to aid to all businesses, except aid for the following:

primary production of fishery, aquaculture and agricultural products;

processing and marketing of fishery, aquaculture and agricultural products where the amount of aid is fixed on the basis of the

price or quantity of items purchased or put on sale, or additionally in the case of agricultural products, where the aid is partly or

wholly passed on to primary producers;

export-related activities, such as a distribution network, to European Union (EU) Member States or non-EU countries;

use of domestic goods and services over imported ones.

De minimis aid

The following conditions apply.

Member States cannot give more than €300,000 over 3 years to a single undertaking (meaning the enterprise that receives the

aid and linked enterprises).

Aid is:

considered granted at the moment that the legal right to receive the aid is conferred on the business, irrespective of when it is

actually paid;

expressed as a cash grant using gross figures;

discounted to its value when granted if paid in several instalments.

Aid granted to a business which subsequently splits into two or more separate entities is allocated to the entity taking over the

activities for which the aid was used.

Aid granted under this regulation may be added to de minimis aid permitted under Regulations (EU)

Nos 1408/2013 and 717/2014 up to €300,000.

Aid granted under this regulation may be fully cumulated with de minimis aid permitted under Commission Regulation (EU)

2023/2832.

Gross grant equivalent

The regulation applies only to aid where the gross amount is clearly identifiable at the moment of granting. As a result, all aid

other than grants must be precisely calculated in terms of gross grant equivalent. Known as ‘transparent de minimis aid’, this rule

applies to:

grants and interest subsidies;

loans if:

the beneficiary is not insolvent and, for large companies, the beneficiary has at least a B– credit rating,

the loan is secured by at least 50% collateral and amounts to a maximum of either €1.5 million over 5 years or €750,000 over 10

years;

capital injections or risk finance in the form of equity or quasi-equity if the total amount is below the €300,000 ceiling;

guarantees if:

the beneficiary is not insolvent and, for large companies, the beneficiary has at least a B– credit rating,

the guarantee does not exceed 80% of the loan at any moment and represents a maximum of either €2,250,000 over 5 years or

€1,125,000 over 10 years,

the gross grant equivalent is calculated on the basis of safe-harbour premiums which protect from liability or penalty, or the

methodology used is appropriate and notified to the Commission before the guarantee is given;

aid to financial intermediaries implementing a de minimis aid scheme, provided they meet certain conditions;

other forms of aid if they respect the €300,000 ceiling.

Monitoring and reporting

Member States must do the following.

Record information, such as the amount of aid granted and the beneficiary, in a publicly accessible central national or European

register from 1 January 2026. Financial intermediaries administering de minimis aid schemes report on a quarterly basis the total

amount of de minimis aid they receive.

Upload information within 20 working days of the aid being granted and keep it for 10 years.

Verify that the €300,000 ceiling is not exceeded before approving de minimis aid under this regulation or under Regulations (EU)

Nos 1408/2013 and 717/2014.

Under transitional arrangements, aid granted before the regulation enters into force is where certain conditions are met.

FROM WHEN DOES THE REGULATION APPLY?

The regulation applies from 1 January 2024 until 31 December 2030.

BACKGROUND

Article 2 of Regulation (EU) 2015/1588 (see summary) on the application of Articles 107 and 108 to certain types of State aid

allows the Commission to include a de minimis rule in any regulation it adopts. This enables it to exempt small amounts of aid

from EU State aid control since they are considered not to have any impact on competition or trade in the single market.

The regulation complements the regulation on de minimis aid for services of general economic interest (Commission Regulation

(EU) 2023/2832 – see summary).

MAIN DOCUMENTS

Commission Regulation (EU) 2023/2831 of 13 December 2023 on the application of Articles 107 and 108 of the Treaty on the

Functioning of the European Union to de minimis aid (OJ L, 2023/2831, 15.12.2023).

Consolidated version of the Treaty on the Functioning of the European Union – Part Three – Union policies and internal actions –

Title VII – Common rules on competition, taxation and approximation of laws – Chapter 1 – Rules on competition – Section 2 – Aids

granted by states – Article 107 (ex Article 87 TEC) (OJ C 202, 7.6.2016, pp. 91–92).

Consolidated version of the Treaty on the Functioning of the European Union – Part Three – Union policies and internal actions –

Title VII – Common rules on competition, taxation and approximation of laws – Chapter 1 – Rules on competition – Section 2 – Aids

granted by states – Article 108 (ex Article 88 TEC) (OJ C 202, 7.6.2016, pp. 92–93).

RELATED DOCUMENTS

Commission Regulation (EU) 2023/2832 of 13 December 2023 on the application of Articles 107 and 108 of the Treaty o