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New guidelines on vertical agreements

In December 2010, the Competition Authority’s new Declaration and Notice in respect of vertical agreements came into effect. Vertical agreements are agreements between businesses operating at different levels of the production or distribution chain (e.g., exclusive distribution and franchising agreements).

As with the previous Declaration and Notice, vertical agreements will not be prohibited under the Irish competition rules where a market share test is satisfied and where no “hard-core” restrictions are included. The Declaration reflects the June 2010 revised EU Block Exemption Regulation (“BER”). A key change is that, in order to avail of the Declaration, both the supplier’s and buyer’s market shares must be 30% or below. Minor changes in relation to selective distribution systems are also included. Agreements falling outside the Declaration do not automatically infringe the Irish competition rules but must be individually assessed.
The previous Notice provided that specified categories of agreements (e.g., non-exclusive distribution) fell outside the scope of the Irish competition rules. The new Notice makes no such provision but refers to the European Commission Guidelines on Vertical Agreements (the “EU Guidelines”) as providing guidance in an Irish context. The Notice provides that sections of the EU Guidelines relating to buyer pool exemptions and the de minimis exemption cannot be relied upon in  the Irish context.

The new rules came into effect on 1 December 2010 for new agreements. The transitional period for existing agreements ended on 31 May 2011.