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A changing landscape for vertical and other non-cartel enforcement

Overall, global fines for vertical and other non-cartel conduct in 2022 were significantly down on previous years (less than half the 2021 and 2020 totals). However, the total number of decisions issued increased slightly (from 53 in 2021 to 57 in 2022).

Many of these decisions involved some form of commitment or settlement in lieu of imposing a fine. 2022 also saw the introduction of important reforms to the rules on vertical restrictions in several key jurisdictions.


Non-cartel decisions by sector, 2022

Significant fines on telecoms operators

Although there were just 11 non-cartel decisions in the TMT sector, these accounted for approximately 85% of total fines. This was largely driven by the significant fine imposed on the Brazilian mobile network operators (as noted above) and the EC’s re-adopted decision against Telefónica and Pharol for entering into a non-compete agreement (EUR79.2m).

High volume of decisions in consumer & retail (albeit with low fine levels)

By contrast, the 24 decisions against operators in the consumer & retail sector only accounted for 8% of global fines, perhaps reflecting the smaller scale of some consumer and retail businesses.

Key themes in non-cartel enforcement 

Forms of non-cartel conduct

RPM continued to be a key enforcement priority for authorities across the world

China issued five decisions relating to resale price maintenance (RPM) conduct. Notably, a fine on the education technology company Kairui for setting the price of courses offered by its franchisees departed from previous judicial practice that had distinguished franchise agreements from other arrangements subject to RPM rules. It remains to be seen how the new Anti-Monopoly Law (AML), which allows businesses to put forward effects-based arguments, will affect RPM enforcement in practice.

RPM was also a key area of focus for authorities in Central and Eastern Europe, with the Czech Republic, Hungary and Poland issuing six decisions, all in consumer and retail sectors. The Hungarian Competition Authority delivered the most recent decision against Yamaha and its distributors. It forms part of a string of cases across Europe that have been initiated by Yamaha’s multiple applications for leniency.

% of vertical decisions involving RPM conduct

Exclusivity arrangements and MFNs/parity clauses: a mixed picture

Exclusivity clauses and ‘most favoured nation’ clauses (MFNs) attracted interest in several jurisdictions in 2022, particularly in the context of digital platforms. Japan’s Fair Trade Commission approved a commitment plan regarding MFN clauses in the contracts used by online travel booking platforms and Expedia. Elsewhere, Brazil’s CADE agreed a settlement with corporate wellness platform Gympass that significantly limited its use of exclusivity and MFN clauses in contracts with gyms, while the Trade Competition Commission of Thailand fined a food delivery platform operator for imposing a clause that incentivised restaurants not to sell on other platforms.

In the UK, by contrast, the Competition Appeal Tribunal (CAT) overturned the CMA’s 2020 decision against price comparison website CompareTheMarket, which had found that wide MFNs infringed antitrust law. The CAT concluded that the wide MFNs in question had no proven anti-competitive effect. This judgment is particularly important in that it potentially undermines the CMA’s decision to characterise wide MFNs as ‘hardcore’ in its new vertical agreements block exemption order, a key point of divergence from the EU approach (see further details below). Going forward, it will be interesting to see how the CMA reconciles the CAT’s judgment with the position set out in its new vertical rules.

2022 saw landmark reforms to the rules and guidelines governing authorities’ enforcement against vertical restraints in the EU, the UK and China.

New EU and UK vertical rules and guidelines

New antitrust regimes for vertical arrangements took effect in both the EU and the UK. Significant and not entirely aligned changes have been made to both rulebooks.

In the EU, a revised Vertical Block Exemption Regulation (VBER) continues to exempt certain categories of vertical arrangements from the prohibition on anti-competitive agreements. In the UK, similar rules are now set out in a Vertical Agreements Block Exemption Order (VABEO).

The updates to the rules in both jurisdictions in large part reflect new market developments and in particular the growth in e-commerce. Other amendments serve to clarify or update existing rules. Helpfully, businesses have 12 month transition periods to make any necessary amendments to ensure that vertical agreements that are block exempted under the old rules continue to benefit from the new block exemptions.

Crucially, however, while the EU and UK take a consistent position in many areas, they diverge in a few key aspects.

Dual distribution.

Both jurisdictions extended the scope of the exemption available for so-called ‘dual-distribution systems’, where suppliers sell goods or services through independent distributors as well as directly to end-customers. Now, agreements where the parties’ activities overlap at the wholesaler or importer level can also be exempt.

However, the EU rules provide for one important new exclusion for online platforms that have a hybrid function, ie that supply online intermediation services while at the same time selling goods or services downstream. The UK opted for a less restrictive approach, with no equivalent ‘hybrid platforms’ exclusion in the VABEO. Both the EU and UK provide similar guidance in relation to information exchange in a dual distribution context.

MFNs/parity obligations.

The assessment of parity obligations attracted considerable debate during the consultation process. In the EU, the key substantive change is that the new VBER excludes across-platform retail parity obligations from the benefit of the block exemption. Under an across-platform parity obligation, a buyer of an online intermediation service (such as a seller on an online marketplace) must not offer, sell or resell goods or services to end users under more favourable conditions through another online intermediation service (such as through another online marketplace).

The UK took a more restrictive approach – under the VABEO, all “wide” retail parity clauses fall outside the scope of the block exemption (including those which relate to indirect sales channels other than online platforms). In addition, the VABEO makes wide retail parity obligations a hardcore restriction, meaning that, where such clauses are included, the entire agreement falls outside the block exemption. As described above, it will be interesting to see how the CMA reacts to the CAT’s recent CompareTheMarket judgment on this topic.

A loosening of restrictions on vertical arrangements in China?

China’s new AML entered into force in August 2022, making it possible for vertical agreements to benefit from a safe harbour if, among other things, the parties’ market shares fall below the threshold specified by China's State Administration for Market Regulation (likely to be 15%).

The new AML also permits a more relaxed approach towards RPM in China, allowing business operators to put forward effects-based arguments to justify their practices (which would have previously been deemed illegal per se). As mentioned above, it remains to be seen whether this potential relaxation will in fact lead to less stringent enforcement.

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