Antitrust bites - Newsletter

European Commission adopts new Vertical Block Exemption Regulation and Vertical Guidelines

On 10 May 2022, the European Commission adopted the new Vertical Block Exemption Regulation (VBER) and the Vertical Guidelines, which will enter into force on 1 June 2022, and replace the previous versions of VBER and Vertical Guidelines expiring on 31 May 2022.

The new Regulation provides for a transitional period of one year, from 1 June 2022, to 31 May 2023, during which the new rules will not apply for the vertical agreements that, at 31 May 2022, are compliant with the previous regime. From 1 June 2023, onwards, such agreements must comply with the new regime.

The new Regulation and the Guidelines have been drafted by the Commission in the light of the results and the contributions gathered during the evaluation and impact assessment phases, which were opened in 2018 and 2020 respectively.

The main changes brought by the new rules concern the electronic commerce, the dual distribution systems, the parity obligations (also known as Most Favored Nation clauses (MFNs)), the exclusive distribution systems, the restrictions of active sales and the sustainability agreements.

As for the e-commerce sector, the new Regulation defines the providers of online intermediation services as “suppliers” for the purposes of the new rules, and it includes among the hardcore restrictions the vertical agreements having as object “the prevention of the effective use of the internet by the buyer or its customers to sell the contract goods or services”. It is however without prejudice to the possibility for the supplier to impose upon the buyer other restrictions of online sales or of advertising, provided that the latter do not have the object of preventing the use of an entire online advertising channel (such as search engines or price comparison services).

The rules concerning dual distribution (the situation in which an undertaking offers goods or services to end users both directly and through third distributors) have been also innovated: the new VBER now provides that the exemption does not apply to vertical agreements concluded between competing undertakings, with specific exceptions. The new VBER now provides that the exemption does not apply to vertical agreements related to the provision of online intermediation services where the online platform is active not only in the upstream market for the provision of intermediation services, but is also competing in the downstream market for the sale of the intermediated goods and services. The new VBER also specifies that, in the context of dual distribution, information exchanges can be exempted as long as they are directly related to the implementation of the vertical agreement or are necessary to improve the production or distribution of the contract goods or services.

The new VBER introduces specific rules concerning parity obligations, providing that the exemption will not cover the clauses that provide for direct or indirect obligations impeding buyers of online intermediation services to offer, sell or resell goods or services to end users under more favorable conditions through competing platforms. Such clauses must be assessed on a case-by-case basis, while different parity obligations will remain exempted, as it was under the previous texts.

As regards exclusive distribution, it is now established that providers can reserve specific territories or customer groups to a maximum of five other distributors (and not just one distributor, as it was before).

The latter change has consequences on the applicable regime to the restrictions of active sales, which are defined by the new VBER as “actively targeting customers” through a wide variety of modalities. For instance, the exemption may apply to the restrictions by which the supplier prevents a distributor and its direct customers from operating active sales in a territory or to a customer group reserved to the supplier or to up to a maximum of five other distributors.

As regards sustainability, the new Guidelines clarify that the vertical agreements pursuing sustainability objectives do not constitute a separate category of agreements and they must be assessed on the basis of the principles set out in the Guidelines, while taking into consideration the objective pursued by them. Therefore, the exemption may apply to the vertical agreements that pursue sustainability objectives, as far as such agreements fulfil the conditions provided for by the VBER.

Private antitrust enforcement and orders to disclose evidence: AG Szpunar’s opinion in case C-57/21

With opinion of 5 May 2022, in case C-57/21, the Advocate General (AG) Szpunar clarified certain conditions and limits to the disclosure of evidence in the context of actions for antitrust damages.

The preliminary case originates from an action for damages brought before a Czech civil court for an alleged abuse of a dominant position. Previously, the Czech competition authority had also opened an investigation against the defendant for an alleged abuse of a dominant position. Both the proceedings of the Czech authority and the action for damages were subsequently stayed, following the opening by the European Commission of a further investigation against the same undertaking, which allegedly substantially involved the same facts. Before the stay of the action for damages, the defendant was ordered to disclose some documents.

Preliminarily, the AG argued that, on the basis of the relevant EU provisions, national courts are not obliged to stay actions for damages pending before them in case the Commission opens an investigation on the same facts. If this happens, EU Directive 2014/104 (the Directive) in principle does not prevent the adoption of orders to disclose evidence while the Commission’s investigation is pending and the action for damages has been accordingly stayed (naturally, within the limits generally provided for by the Directive).

From a different perspective, the decision of a national competition authority to stay its own proceedings, due to the parallel opening of an investigation by the Commission, does not mean the national investigation is deemed to be closed. Therefore, even after the stay of the proceedings, it’s not possible to order the disclosure of the categories of evidence referred to in Article 6, para. 5, of the Directive (the gray list), which can be disclosed only after the proceedings have been closed. Furthermore, according to the AG, national provisions that include, in the gray list, any piece of information provided in the context of a national proceedings and not only the information “specifically prepared” for the purposes of the procedure (as provided for by the Directive) would be in contrast with the Directive.

Finally – even though such a power is provided for by Article 6, para. 7, of the Directive only for evidence included in the “black list,” which can never be the subject of a disclosure order – the Directive does not prevent a national court from ordering the seizure of evidence while at the same time ordering to disclose that piece of evidence, to assess whether that piece of evidence falls within the gray list. In such a case, the national court must ensure that the parties of the proceedings do not have access to the evidence before the court has completed its assessment.

Antitrust law and labor markets: Portuguese competition authority closes investigation regarding no-poach agreement

With its decision of 28 April 2022, the Portuguese competition authority has fined the football clubs that took part in the Portuguese first and second division during the 2019/2020 season, and the Portuguese football federation, for an anti-competitive agreement. The antitrust infringement was realized through a “no-poach agreement” (in short, an agreement between competing undertakings which agree not to hire / make offers to each other's employees).

The proceedings were opened in May 2020, following two press releases from the Portuguese football federation, which disclosed a decision, taken jointly by the first division clubs and which was endorsed by the second division clubs. The clubs agreed not to recruit those players who had decided to unilaterally terminate their contract with their (previous) club invoking issues caused by the outbreak of the COVID-19 pandemic.

In conjunction with the opening of the proceedings, the Portuguese authority had imposed interim measures, ordering the immediate stay of the decision's effectiveness.

At the end of the investigation, the Portuguese authority imposed fines for a total of approximately EUR11.3 million, highlighting that the agreement could distort competition, on the demand side, on the market for hiring professional players. The agreement would indeed have kept the players tied to their clubs, limiting their incentive to terminate their respective contracts and reducing their mobility. It could not even have been argued that the agreement would have been aimed at cooperation objectives which could have been regarded as essential in the context of the COVID-19 pandemic. Indeed, it could have reduced the quality of the matches, thereby harming consumers by forcing the players to leave Portugal to pursue their professional activity.

It’s interesting to note that the Portuguese authority has identified the relevant market in that of the hiring of male professional players, regardless of the transfer methods, arguing that the relevant geographic market would have been merely national.

The Portuguese authority has held that this is the first fine for an anti-competitive practice in the labor market. This case highlights a growing attention towards anti-competitive agreements in the labor markets (for example, the Portuguese authority, in 2021, issued a report and a best practices guide on no-poach agreements).

Work begins on eliminating State aid Temporary framework related to the COVID-19 emergency

With a press release of 12 May 2022, the Commission disclosed its intention to gradually eliminate the Temporary framework for state aid measures aimed at supporting the economy in the emergency context of COVID-19.

On 19 March 2020, the Commission adopted the Temporary framework to provide support to undertakings in the emergency period by granting them sufficient liquidity and economic continuity. Most of the tools provided for in the context of the Temporary framework, as last amended in November 2021, will cease to apply on 30 June 2022.

The Commission has declared its intention not to extend the duration of the Temporary framework beyond the currently applicable deadlines. The only measures remaining in force after 30 June 2022, are those for the support of investments and solvency, which will continue to apply, respectively, until the established deadlines of 31 December 2022, and 31 December 2023.

The Commission has clarified that the Member States, after 30 June 2022, will still be able to convert the loans they granted under the Temporary framework into limited amounts of aid in the form of direct grants, if allowed by national schemes. The Member States may also provide for schemes that allow to restructure loans.

European Commission opens public consultation on simplification of merger control rules

The European Commission has launched a public consultation concerning the proposed revisions to the Regulation implementing Regulation no. 139/2004 on the control of concentrations between undertakings and to the Notice concerning a simplified procedure for the examination of certain concentrations.

The proposed revisions to the Implementing Regulation and to the Notice on simplified procedure – the object of the consultation – are part of a wide process started by the Commission to simplify the procedure for the examination of operations which are unlikely to raise anticompetitive concerns, with the final objective of focusing its resources on the most complex and relevant cases.

The changes proposed by the Commission are aimed at:

• expanding and clarifying the categories of cases that can be treated under the simplified procedure;
• introducing refined safeguards to avoid the simplified procedure applying to cases that merit a more detailed review;
• ensuring effective and proportionate information gathering, by introducing a new notification form for cases falling under the simplified procedure;
• streamlining the review of cases which do not fall under the simplified procedure; and
• introducing electronic notification and electronic submission of documents.

The conclusion of the public consultation is planned for 3 June 2022. The objective of the Commission is that the new rules enter into force in 2023.