Exemption for certain vertical agreements

1) OBJECTIVE

To empower the Commission to adopt by regulation block exemptions for certain vertical agreements, decisions and concerted practices.

2) ACT

Council Regulation (EEC) No 19/65 of 2 March 1965 on the application of Article 81(3) (formerly Article 85(3)) of the Treaty to certain categories of agreements and concerted practices [Official Journal L 36 of 06.03.1965].

Amended by:

Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty [Official Journal L 1 of 04.01.2003];

Council Regulation (EC) No 1215/1999 of 10 June 1999 [Official Journal L 148 of 15.06.1999].

3) SUMMARY

Background

Under Article 81(3) of the EC Treaty and without prejudice to the rules on its implementation as established by Regulation (EC) n° 1/2003, Regulation No 19/65 empowers the Commission to grant exemptions by regulation in respect of certain categories of exclusive agreements between two firms for the resale of goods. It does not apply to agreements between more than two firms or to agreements on exclusive distribution, delivery or purchase of services or products for processing.

Over the years, the approach envisaged by the Regulation has proved too rigid in terms of the changing economic situation and current distribution techniques. However, Regulation No 1215/1999 has extended its scope to include vertical agreements.

Scope

The Commission may, by way of regulation, exempt certain agreements or concerted practices such as:

• agreements between two or more firms relating to the purchase, sale or resale of goods or services;
• agreements between two firms which impose restrictions on purchases or on the use of intellectual property rights or know-how.

Conditions for the implementation of the exemption regulations

The exemption regulations laid down by the Commission must meet a number of conditions. They must:

• contain a definition of the categories of agreements, decisions and concerted practices to which they apply and specify the restrictions, clauses or other conditions which may appear in them;
• apply for a limited period, although they may be amended or repealed;
• apply with retroactive effect so as to take in agreements which, at their date of entry into force, satisfied the conditions for exemption.

The regulations concerned must comply with the following approval procedure:

• the proposal for a regulation must be published so as to enable all persons and organisations concerned to submit their comments to the Commission;
• the Commission must consult the Advisory Committee on Restrictive Practices and Dominant Positions before publishing a draft or adopting a regulation.

Following the entry into force of Regulation No 1/2003, which governs the changeover from a system of centralised authorisation based on prior notification to a legal exception system, national authorities and courts are being called upon to ensure, for purposes of implementing competition law, that the competition rules are complied with.

Last updated: 21.02.2007