New EU Distribution Rules Allow Discrimination Against Online Commerce

BY Heather Greenfield
July 9, 2021

Brussels, BELGIUM — The European Commission has published its draft revisions to distribution rules known as the Vertical Block Exemption Regulation and the Vertical Guidelines (“VBER”). The VBER covers so-called vertical agreements between suppliers and their retailers or distributors. The updated rules replace the current rules on June 1, 2022.

Digital distribution models have been growing over the last years and will continue to grow. Consumers benefit from an abundance of choice on digital shelves equally available across the entire EU. Prices are driven down by vigorous competition across the EU between suppliers on digital intermediaries that make it easier than ever for consumers to learn about the products, services, and sellers they choose to deal with. 

The Commission’s proposed revisions to long-standing rules governing vertical agreements would make it easier for big brands to discriminate against online sales channels on both price and non-price terms. In particular, the Commission’s draft VBER would relax rules currently prohibiting suppliers from imposing higher prices on online sales channels (so-called dual-pricing) or imposing stricter criteria on online sellers seeking admission into selective distribution systems. The new rules would also make it easier for brands to limit sellers’ use of digital advertising to reach customers. These and other changes facilitating discrimination against online commerce, will likely have negative consequences for consumers and for the integrity of the EU single market.  

CCIA responded to the 2019 consultation and since warned of the risk to consumers and retailers of rules discriminating against online commerce. CCIA looks forward to providing formal comments on the draft VBER.

The following quotes can be attributed to Kayvan Hazemi Jebelli, Competition & Regulatory Counsel to CCIA:

“We would caution against giving big manufacturers and brand owners more freedom to discriminate against online sales channels. Using competition tools to favour big brands will likely have negative consequences, particularly for consumers and small businesses who benefit from the competition that online distribution channels have created.”

“For Europe to catch-up technologically, it needs a deeply integrated digital single market with increased use of digital services including e-commerce. This initiative suggests an outdated industrial policy objective to move more commerce offline and give brands more powers to fragment the EU internal market.”

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