Irish Competiton Law
Irish Category Licence
The Competition Authority, now the Competition and Consumer Protection position, issued a new category declaration in relation to vertical agreements and concerted practices in 2010. The declaration follows closely the equivalent 2010 EU block exemption regulation. This exempts certain types of agreements and practices from the general prohibition
The declaration is inapplicable to vertical agreements between competing undertakings. It may apply where competing undertakings enter into a non-reciprocal vertical agreement, and the supplier is a manufacturer and distributors of goods while the buyer is a distributor and not a competing undertaking at the manufacturer level.
The declaration applies to vertical agreements containing provisions which relate to the assignment to or use by the buyer of intellectual property rights, provided they do not constitute the primary objective of the agreement and are directly related to the use, sale and re-sale of goods and services by the buyer or its customer. The declaration applies on condition that the provisions do not contain restrictions on competition having the same effect as vertical restraints, which are not covered by the declaration.
The declaration applies where the supplier is the provider of the service at several levels of trade, while the buyer provides its goods and service at the retail level and is not a competing undertaking at the level of trade where it purchases the contract services.
Market Share
The declaration applies provided the market share held by the supplier does not exceed 30 percent of the relevant market on which it sells the contract goods or services and the market share held by the buyer does not exceed 30 percent of the relevant market on which it purchases the contract goods and services.
Where in a multi-party agreement, an undertaking buys the contract goods and services from one undertaking party to the agreement and sells the contract goods or services to another undertaking party, to the agreement, the market share of the first must meet the market share threshold above, both as a buyer and supplier.
The market share thresholds are calculated on the basis of market sale share data or market purchase value data, as the case may be. Where the data is not available, estimates based on other reliable market information may be used including, sales and purchase volumes. The market shares are calculated on the basis of data relating to the preceding calendar year.
The market share of the supplier includes goods and services supplied to partially integrated distributors, for the purpose of sale. If the market share is initially not more than 30 percent, but subsequently rises above that level without exceeding 35 percent, the declaration shall continue to apply for a period of two consecutive calendar years, following the year in which the 30 percent market share threshold is first exceeded.
If the market share is initially not more than 30 percent, but subsequently rises above 35 percent, the declaration shall continue to apply for one year following the year in which the 35 percent was first exceeded. These two points may not be used in combination.
Prohibited Objectives
The declaration does not apply to vertical agreements which directly or indirectly, in isolation or in combination with other factors under the control of the party, have as their objective the restriction of the buyer’s ability to determine its sale price. This does not affect the ability of suppliers to impose a maximum sale price or a recommended sale price, provided they do not amount to a fixed or minimum sale price as a result of pressures from or incentives offered by any of the parties.
The agreement must not have as its objective, the restriction of the territory into which, or of the customers to whom, a buyer party of the agreement, without prejudice to the supplier’s ability to place restrictions on the buyer’s place of establishment, may sell the contract goods or services.
This does not apply to
- the restriction of active sales into the exclusive territory or to an exclusive customer group reserved to the supplier or allocated to another buyer, where such restrictions do not limit sales by the customers of the buyer;
- the restriction of sales to end users by a buyer operating at the wholesale level;
- the restriction of sales by members of a selected distribution system to unauthorised distributors within the territory reserved by the supplier to operate that system and
- the restriction of the buyer’s ability to sell components supplied for the purposes of incorporation to a customer who would use them to manufacture the same time of goods as those produced by the supplier.
Disapplication I
The declaration does not apply to vertical agreements, which directly or indirectly, in isolation or in combination with other factors under the control of the parties have as their objective;
- the restriction of active or passive sales to end users by the members of a selective distribution system at the retail level;
- the restriction of cross supplies between distributors within a selective distribution system, including those operating at different levels of trade;
- restrictions agreed between a supplier of components and a buyer who incorporates components, of the supplier’s ability to sell the components and spare parts to end users, repairers or the other service providers not entrusted by the buyer with the repair or servicing of its goods.
The declarations do not apply to the following obligations in vertical agreements;
- any direct or indirect non-compete obligation with indefinite duration or duration in excess of five years;
- any direct or indirect obligation, causing the buyer after termination of the agreement not to manufacture, purchase, sell or resell goods or services;
- any direct or indirect obligation causing the members of selective distribution system not to sell the brands of particular competing suppliers.
Disapplication II
For the above purposes, a non-compete obligation which is tacitly renewable beyond the period of five years is deemed indefinite. By way of derogation, the time limit of five years does not apply when the contract goods services or services are sold to the buyer from premises and land owned by the supplier or leased by the supplier from third parties, not connected with the buyer. This is provided that the duration of the non-compete obligation does not exceed the period of occupancy of the premises and land by the buyer.
By way of derogation from the obligation not to manufacture, sell or resell goods after termination, the declaration does not apply to any direct or indirect obligation which causes the buyer after termination, not to manufacture, purchase or resell goods or services where the following conditions are fulfilled.
- the obligation relates to goods or services which compete with the contract goods or services;
- the obligation is limited to premises and land from which the buyer has operated during the contract period;
- the obligation is indispensable to protect know-how transferred by the supplier to the buyer;
- the duration of the obligation is limited to a period of one year after termination of the agreement.
The above is without prejudice of the possibility of imposing a restriction which is unlimited in time on the use and disclosure of know-how which has not entered the public domain.
Commercial Agency
The EU Directive on commercial agency provides for the terms on which restrictions may be imposed on commercial agents following termination of the agency. Non-compete clauses are valid only to the extent that it is concluded in writing and relates to a geographical area or group of customers and geographical area entrusted to the commercial agents and the type of goods covered by the agency under the contract. It shall be valid for not more than two years after termination of the agency. This principle is without prejudice to other rules on restraints under domestic law.
If the agent is a part of the undertaking or business, no competition law issues arise, as there is no arrangement or agreement between undertakings. Where the agent is not in substance part of the business, such as where it deals with other goods, competition law is potentially applicable in full.
The substance of the position will be reviewed and the labels put on the agreement will not be conclusive. The competition authority has been particularly concerned by cumulative effects which of restrictions placed on many agents.
Approach of Commission I
Prior to the present more general Verticals Declaration, the Competition Authority, now the Competition and Consumer Protection Commission. had adopted a more specific and prescriptive certificate and category licences. They applied to vertical agreements between undertakings at different stages in the supply chain in respect of the same product or service. It, therefore, included franchising agreements, selective distribution, exclusive purchasing, non-exclusive and exclusive distribution.
The older Certificate acknowledged that restraints may or may not have anticompetitive effects, depending on the circumstances. It recognised that certain vertical restraints may have positive economic effects overall, while others were not welfare enhancing.
Vertical agreements could potentially promote the sale of products and lead to intensive marketing and continuity of supplies while rationalising distribution. The appointment of an exclusive distributor may be the most effective way for the manufacturer to enter a market and compete with existing manufacturer.
Approach of Commission II
The Competition Authority / Commission take the view that vertical agreements may lead to an improvement in distribution because of concentration on sales activity without the need to maintain numerous business relations, with a large number of dealers. Accordingly, vertical restraints should not automatically be deemed anticompetitive.
Where negative effects arise, they may not have significant economic effects, in the absence of significant market power on the part of the supplier or distributor/retailer level.
Generally, the Authority was of the view that when either the supplier or the reseller have a market share in excess of 20 percent, that there is extremely unlikely to be a sufficient degree of market power for any non-price vertical restraint to have an adverse effect on competition. The market should not generally be foreclosed.
In such circumstances, the Authority accepted (and the Commission broadly continues to accept) that non-price vertical restraints are not generally, anti-competitive. However, if the parties have more than 20 percent of the relevant market, they may enjoy market power. A market analysis may show that non-price vertical agreements may have an anticompetitive effect in the particular circumstances.
Non-Exclusive Distribution I
Non-exclusive distribution agreements do not allocate territory to the reseller. They do not, in general, prevent, restrict or distort competition. However, the Authority were of the view that certain types of clauses may contravene the Competition Act. They fall into the following categories;
- resale price maintenance;
- absolute territorial protection;
- post-term non-compete clauses;
- limitations on the distributors’ freedom to set prices.
The Competition Authority indicated that maximum retail price maintenance may be anti-competitive in some circumstances, but may not always necessarily be so. It may enable franchisors to encourage outlets to engage in price promotions nationwide. It may boost sales volumes by lowering prices. However, the Authority emphasised that they may carry significant risks and may be scrutinised in detail.
The Commission is likely to continue to take this approach.
Non-Exclusive Distribution II
Recommended prices may not contravene the Competition Act provided retailers are free to set their own price. However, in order to be acceptable, the price recommendation must specifically inform the seller that it is free to set its own prices, contain no reference to margin, involve no requirement to display the recommended price and provide that no measure is taken to secure adherence of the price.
Restrictions which prevent re-sellers selling outside the territory allocated to them is restrictive of competition. It viewed the restriction as particularly invidious, where it may be part of the chain of similar agreements.
Post-term restrictions may contravene the Competition Act. Franchise agreements, providing a non-compete clause for one year is afterwards termination, will not generally convene the restriction provided it is necessary in order to protect the goodwill. It is recognised that the franchisor may have supplied the necessary information, training, intellectual property and know-how, necessary to operate the business.
Potentially Justifiable Provisions
Some provisions which might breach the general prohibition, may be potentially permissible on the basis that they allow a fair share of the benefit to consumers. The category certificate recognises notwithstanding that some vertical agreements may have anti-competitive effects where the market share exceeds 20 percent, they may lead to efficiencies in distribution.
Some vertical agreements may allow manufacturers to concentrate on production by delegating distribution functions to specialise resellers who already possess the necessary organisation and dealer contacts. It may promote the development of intensive marketing and continuity of supplies. Non-vertical price restraints may allow a fair share of the resulting benefit provided where they lead to improvement in distribution and lead to a wider choice of products being available to consumers.
Some non-price vertical restraints in an exclusive distribution, franchising or selective distribution agreements may be indispensable to the attainment of a legitimate objective. The economic analysis may show that there create strong incentives for resellers to devote the necessary time and resources promoting and selling the products of the manufacturer, in circumstances where it will be difficult to monitor the activities of the reseller. They may be essential to maximise efficiency in distribution.
UK Competition Law
The Competition Act introduced in the UK in 1998 and reformed in 2002, brings UK competition rules more closely in line with European Union competition law. Agreements are prohibited between undertakings which may affect trade in the United Kingdom or which have the object or effect of restricting competition within the United Kingdom or part of it. The agreement must have an appreciable effect on trade within the United Kingdom to be caught.
The UK Competition Authority accept that vertical agreements do not generally give rise to competition concerns unless one of the parties enjoys market power or an agreement forms part of a wider network of agreements. The Secretary of State has powers under the Competition Act to make Orders providing for the exclusion of vertical agreements. This has been done. Since May 2005 the EU vertical agreement blocks exemption applies so as to exempt vertical agreements under both the UK and European Union prohibition.
Above the 30% market share threshold, an exclusive distribution arrangement may be permissible. The requirements for admission to selective distribution system must be applied objectively and without discrimination. Restrictions imposed on distributors must not be excessive in relation to requirements. There are certain products for which selective distribution has been found to be necessary. Luxury goods, technically complex products or products which combine luxury and complexity may justify selective distribution.
References and Sources
Comercial Law Fidelma White 2nd Ed 2012 Ch 4
Enclylopaedia of Forms and Precedents Vol. 16 (4)
International Commercial Agency and Distribution Agreements: Case Law and Contract Clauses (AIJA Series) (2011) H
Distribution Agreements under EC Comptetition Law: Viktoria Robertson (2008)
International Agency, Distribution and Licensing Agreements (Commercial) Christou
Distribution Agreements Under the EC Competition Rules 2002 Korah O’Sullivan
DECLARATION IN RESPECT OF VERTICAL AGREEMENTS AND CONCERTED PRACTICES
Decision No. D/10/001
Date: 1 December 2010
Declaration In Respect of Vertical Agreements and Concerted Practices.
Whereas:
(i) Section 4(1) of the Competition Act 2002 (“the Act”) prohibits all
agreements between undertakings, decisions of associations of undertakings and
concerted practices which have as their object or effect the prevention, restriction
or distortion of competition in trade in any goods or services in the State or in an
part of the State,
and
(ii) Section 4(3) of the Act permits the Competition Authority (“the Authority”)
to declare in writing that in its opinion a specified category of agreements,
decisions or concerted practices complies with conditions set out in section 4(5),
which are that the agreements, decisions or concerted practices, having regard to
all relevant market conditions, contribute to improving the production or
distribution of goods or provision of services or to promoting technical or economic
progress, while allowing consumers a fair share of the resulting benefit and do not
(a) impose on the undertakings concerned terms which are not indispensable to
the attainment of these objectives, (b) afford undertakings the possibility of
eliminating competition in respect of a substantial part of the products or services
in question,
and
(iii) Section 4(2) of the Act provides that an agreement, decision or concerted
practice shall not be prohibited if it falls within a category of agreements,
decisions or concerted practices the subject of a declaration for the time being in
force under section 4(3),
and
(iv) Section 4(3) further provides that any such declaration may be revoked by
the Authority if it becomes of the opinion that the category no longer complies
with those conditions,
PURSUANT TO SECTION 4(3) OF THE ACT, THE AUTHORITY
HEREBY DECLARES AS FOLLOWS: –
Article 1
1. For the purposes of this Declaration:
(a) “actual competitor” means an undertaking that is active on
the same relevant market;
(b) “buyer” includes an undertaking which, under an agreement
falling within Section 4(1) of the Act, sells goods or services
on behalf of another undertaking;
(c) “competing undertaking” means an actual or potential
competitor;
(d) “connected undertakings” means:
(i) undertakings in which a party to the agreement,
directly or indirectly:
– has the power to exercise more than half the
voting rights, or
– has the power to appoint more than half the
members of the supervisory board, board of
management or bodies legally representing the
undertaking, or
– has the right to manage the undertaking’s
affairs;
(ii) undertakings which directly or indirectly have, over
a party to the agreement, the rights or powers
listed in (i);
(iii) undertakings in which an undertaking referred to
in (ii) has, directly or indirectly, the rights or
powers listed in (i);
(iv) undertakings in which a party to the agreement,
together with one or more of the undertakings
referred to in (i), (ii) or (ii), or in which two or
more of the latter undertakings, jointly have the
rights or powers listed in (i);
(v) undertakings in which the rights or the powers
listed in (a) are jointly held by:
– parties to the agreement or their respective
connected undertakings referred to in (i) to (iv), or
– one or more of the parties to the agreement or
one or more of their connected undertakings
referred to in (i) to (iv) and one or more third
parties.
(e) “customer of the buyer” means an undertaking not party to
the agreement which purchases the contract goods or
services from a buyer which is party to the agreement.
(f) “intellectual property rights” includes industrial property
rights, know-how, copyright and neighbouring rights;
(g) “know-how” means a package of non-patented practical
information, resulting from experience and testing by the
supplier, which is secret, substantial and identified: in this
context, ‘secret’ means that the know-how is not generally
known or easily accessible; ‘substantial’ means that the
know-how is significant and useful to the buyer for the use,
sale or resale of the contract goods or services; ‘identified’
means that the know-how is described in a sufficiently
comprehensive manner so as to make it possible to verify
that it fulfils the criteria of secrecy and substantiality;
(h) “non-compete obligation” means any direct or indirect
obligation causing the buyer not to manufacture, purchase,
sell, or resell goods or services which compete with the
contract goods or services, or any direct or indirect
obligation on the buyer to purchase from the supplier or
from another undertaking designated by the supplier more
than 80% of the buyer’s total purchases of the contract
goods or services and their substitutes on the relevant
market, calculated on the basis of the value or, where such
is standard industry practice, the volume of its purchases in
the preceding calendar year;
(i) “potential competitor” means an undertaking that, in the
absence of the vertical agreement, would, on realistic
grounds and not just as a mere theoretical possibility, in
case of a small but permanent increase in relative prices be
likely to undertake, within a short period of time, the
necessary additional investments or other necessary
switching costs to enter the relevant market;
(j) “selective distribution system” means a distribution system
whereby the supplier undertakes to sell the contract goods
or services, either directly or indirectly, only to distributors
selected on the basis of specified criteria and where these
distributors undertake not to sell such goods or services to
unauthorised distributors within the territory reserved by
the supplier to operate that system;
(k) “vertical agreement” means an agreement or concerted
practice entered into between two or more undertakings
each of which operates, for the purposes of the agreement
or concerted practice, at a different level of the production
or distribution chain, and relating to the conditions under
which the parties may purchase, sell or resell certain goods
or services;
2. For the purposes of this Declaration, the terms “undertaking”,
“supplier” and “buyer” include their respective connected
undertakings.
Article 2
1. In the Authority’s opinion vertical agreements of the kind
referred to in Article 3 of this Declaration comply with the conditions
referred to in Section 4(5) of the Act.1
to the extent that such
agreements contain restrictions of competition which would
otherwise be prohibited by Section 4(1) of the Act.
Article 3
1. This Declaration applies to vertical agreements containing
provisions which relate to the assignment to the buyer or use by the
buyer of intellectual property rights, provided that those provisions
do not constitute the primary object of such agreements and are
directly related to the use, sale or resale of goods or services by the
buyer or its customers. The Declaration applies on condition that, in
relation to the contract goods or services, those provisions do not
contain restrictions of competition having the same object or effect
as vertical restraints which are not covered by this Declaration.
2. This Declaration does not apply to vertical agreements entered
into between competing undertakings, except where competing
undertakings enter into a non-reciprocal vertical agreement and:
(a) the supplier is a manufacturer and a distributor of goods,
while the buyer is a distributor and not a competing
undertaking at the manufacturing level; or
Those conditions are: that, having regard to all relevant market conditions, the agreements
contribute to improving the production or distribution of goods or provision of services or to promoting
technical or economic progress, while allowing consumers a fair share of the resulting benefit and do
not –
(a) impose on the undertakings concerned terms which are not indispensable to the
attainment of these objectives,
(b) afford undertakings the possibility of eliminating competition in respect of a
substantial part of the products or services in question.
(b) the supplier is a provider of services at several levels of
trade, while the buyer provides its goods or services at
the retail level and is not a competing undertaking at the
level of trade where it purchases the contract services.
3. Subject to paragraph 4 of this Article, this Declaration applies on
condition that the market share held by the supplier does not exceed
30% of the relevant market on which it sells the contract goods or
services and the market share held by the buyer does not exceed 30
% of the relevant market on which it purchases the contract goods
or services.
4. For the purposes of paragraph 3, where in a multi party
agreement an undertaking buys the contract goods or services from
one undertaking party to the agreement and sells the contract goods
or services to another undertaking party to the agreement, the
market share of the first undertaking must respect the market share
threshold provided for in that paragraph both as a buyer and a
supplier in order for the exemption provided for in Article 2 to apply.
Article 4
1. This Declaration does not apply to vertical agreements the subject
matter of which falls within the scope of any other Declaration made
pursuant to Section 4(3) of the Act.
2. This Declaration does not apply to vertical agreements which,
directly or indirectly, in isolation or in combination with other factors
under the control of the parties, have as their object:
(a) the restriction of the buyer’s ability to determine its sale
price. This does not affect the ability of suppliers to
impose a maximum sale price or recommend a sale price,
provided that they do not amount to a fixed or minimum
sale price as a result of pressure from, or incentives
offered by, any of the parties;
(b) the restriction of the territory into which, or of the
customers to whom, a buyer party to the agreement,
without prejudice to a supplier’s ability to place
restrictions on the buyer’s place of establishment, may
sell the contract goods or services, except:
(i) the restriction of active sales into the exclusive
territory or to an exclusive customer group
reserved to the supplier or allocated by the
supplier to another buyer, where such a restriction
does not limit sales by the customers of the buyer,
(ii) the restriction of sales to end users by a buyer
operating at the wholesale level of trade,
(iii) the restriction of sales by the members of a
selective distribution system to unauthorised
distributors within the territory reserved by the
supplier to operate that system, and
(iv) the restriction of the buyer’s ability to sell
components, supplied for the purposes of
incorporation, to customers who would use them
to manufacture the same type of goods as those
produced by the supplier;
(c) the restriction of active or passive sales to end users by
members of a selective distribution system operating at
the retail level of trade, without prejudice to the
possibility of prohibiting a member of the system from
operating out of an unauthorised place of establishment;
(d) the restriction of cross-supplies between distributors
within a selective distribution system, including between
distributors operating at different level of trade;
(e) the restriction, agreed between a supplier of components
and a buyer who incorporates those components, of the
supplier’s ability to sell the components as spare parts to
end-users or to repairers or other service providers not
entrusted by the buyer with the repair or servicing of its
goods.
Article 5
1. This Declaration does not apply to the following obligations
contained in vertical agreements:
(a) any direct or indirect non-compete obligation, the
duration of which is indefinite or exceeds five years;
(b) any direct or indirect obligation causing the buyer, after
termination of the agreement, not to manufacture,
purchase, sell or resell goods or services;
(c) any direct or indirect obligation causing the members of a
selective distribution system not to sell the brands of
particular competing suppliers.
For the purposes of paragraph (1)(a), a non- compete obligation
which is tacitly renewable beyond a period of five years shall be
deemed to have been concluded for an indefinite duration.
2. By way of derogation from paragraph 1(a), the time limitation
of five years shall not apply where the contract goods or services are
sold by the buyer from premises and land owned by the supplier or
leased by the supplier from third parties not connected with the
buyer, provided that the duration of the non-compete obligation
does not exceed the period of occupancy of the premises and land
by the buyer.
3. By way of derogation from paragraph 1(b), the Declaration
shall apply to any direct or indirect obligation causing the buyer,
after termination of the agreement, not to manufacture, purchase,
sell or resell goods or services where the following conditions are
fulfilled:
(a) the obligation relates to goods or services which compete
with the contract goods or services;
(b) the obligation is limited to the premises and land from
which the buyer has operated during the contract period;
(c) the obligation is indispensable to protect know-how
transferred by the supplier to the buyer;
(d) the duration of the obligation is limited to a period of one
year after termination of the agreement.
Paragraph 1(b) is without prejudice to the possibility of imposing a
restriction which is unlimited in time on the use and disclosure of
know-how which has not entered the public domain and this
Declaration will apply in such cases.
Article 6
1. For the purposes of applying the market share thresholds
provided for in Article 3(3), the following rules shall apply:
(a) the market share of the supplier shall be calculated on
the basis of the market sales value data and the market
share of the buyer shall be calculated on the basis of
market purchase value data. If market sales value or
market purchase value data are not available, estimates
based on other reliable market information, including
market sales and purchase volumes, may be used to
establish the market share of the undertaking concerned;
(b) the market shares shall be calculated on the basis of data
relating to the preceding calendar year;
(c) the market share of the supplier shall include any goods
or services supplied to vertically integrated distributors
for the purposes of sale;
(d) if the market share is initially not more than 30% but
subsequently rises above that level without exceeding
35%, this Declaration shall continue to apply for a period
of two consecutive calendar years following the year in
which the 30% market share threshold was first
exceeded;
(e) if a market share is initially not more than 30% but
subsequently rises above 35%, this Declaration shall
continue to apply for one calendar year following the year
in which the level of 35% was first exceeded;
(f) the benefit of points (d) and (e) may not be combined so
as to exceed a period of two calendar years.
(g) the market share held by the undertakings referred to in
Article 1(e)(v) shall be apportioned equally to each
undertaking having the rights or the powers listed in
Article 1(e)(i).
Article 7
1. Existing agreements and concerted practices which:
(a) comply with the existing Declaration in Respect of Vertical
Agreements and Concerted Practices (D/03/001); and
(b) were entered into prior to 1 December 2010;
shall continue to benefit from the said Declaration D/03/001 in
respect of agreements between suppliers and resellers until 31 May
2011.
Article 8
1. The Authority may amend this Declaration from time to time,
including in particular an amendment to exclude a particular
category of goods or services, where in its opinion access to the
relevant market or competition therein is significantly restricted by
the cumulative effect of parallel networks of similar vertical
restraints implemented by competing suppliers or buyers covering
more than 50% of a relevant market.
2. This Declaration shall enter into force on 1 December 2010,
with a review after 6 years, and shall expire on 1 December 2020.
For the Competition Authority
______________________
Dr Stanley Wong
Member & Director of Monopolies Division
Competition Authority
30 November 2010
_______________________
Competition Authority Declarations and Notice – Consultation Paper 1
Competition Authority
Notice in Respect of Vertical Agreements and
Concerted Practices
Decision N/10/01
Date: December 2010
Competition Authority Declarations and Notice – Consultation Paper 1
Introduction
1. Under section 30(1)(d) of the Competition Act 2002 (“the Act”), the
Competition Authority (“the Authority”) may publish Notices containing
practical guidance as to how the provisions of the Act may be complied
with.
2. The Authority has issued a Category Declaration in respect of Vertical
Agreements and Concerted Practices (“the Declaration”),1
which exempts
certain categories of agreements and concerted practices from the
prohibition set out in section 4 of the Act. The Authority considers that it
would be useful for interested persons to have some informal guidance on
how to assess their vertical agreements so as to ensure that they can avail
themselves of the exemption provided for by the Declaration.
3. The Declaration closely resembles the EU Commission‘s Block Exemption
Regulation No. 330 of 2010 (“the BER”). Accordingly, subject to the
exceptions set out in paragraphs 4 and 5 below, the Commission’s
Guidelines on Vertical Restraints (“the EU Guidelines”)2
, which give
practical assistance on assessing whether vertical agreements conflict with
the BER, may also be referred to for guidance in assessing whether an
agreement is likely to fall outside section 4(1) of the Act.
4. Article 2(2) of the BER features an exemption for retailer buyer pools,
where no individual member (or its connected undertakings) of a buyer
pool has an annual turnover in excess of €50 million. There is no retailer
buyer pool exemption for the Irish market in the Declaration, and
therefore paragraphs 28 and 29 of the EU Guidelines cannot be relied
upon as guidance for the purposes of the Declaration. Buyer pools are
not, however, intended to be excluded from the general scope of the
Declaration.
5. Additionally, in its Notice on Activities of Trade Associations and
Compliance with Competition Law,
(“the Trade Associations Notice”),
the Authority issued guidance to business about the limits that competition
law places on joint or co-ordinated action by competitors (trade
associations). Insofar as retail buyer pools contain competing
undertakings, then the guidance set out in the Trade Associations Notice
will apply. Paragraph 4.48 of the Trade Association Notice states:
“There are no absolute market share thresholds indicating when a
group purchasing arrangement will result in the creation of market
power. However, the European Commission have indicated in their
Horizontal Guidelines that group purchasing arrangements leading to a
combined market share of less than 15% in both the purchasing and
selling markets are unlikely to raise concerns under the competition
rules.”