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.”