Selective distribution systems in practice : Consequences of and justifications for selective distribution together with effects of the new Block Exemption Regulation

Abstract: On 1 June 2010, a new Block Exemption Regulation (BER) and new Guidelines that affect the practical use of selective distribution systems enter into force. The BER exempts vertical agreements, such as selective distribution agreements, from the prohibition of Article 101 (1) TFEU. It is significant for individual market players to obtain knowledge of what impact the new BER and the new Guidelines have for the practical use of selective distribution systems. The Commission has amended the new BER and the new Guidelines in the light of the development the last decade. Two main changes are noticed that affect the content of the new legislative documents. Firstly, it is established that many distributors have obtained larger market shares. Secondly, it is stated that Internet sales have increased largely. The basic principles of the new versions of the BER and the Guidelines are identical with the former versions but the present changes are although noticeable for companies and their selective distribution systems. The new BER contains a new market share rule that is more restrictive than the corresponding rule in the former BER. However, the new market share rule is not an expression of a less tolerant approach towards selective distribution systems; rather an amendment necessary due to the development of distributors’ market shares. The growth of distribution in the Internet the last ten years is reflected in the new Guidelines. The Commission’s approach towards the Internet as a distribution method seems in general to be positive. It is noticeable that the Commission wants that parties of selective distribution agreements shall be able to benefit from all the positive effects of online sales at the same time as the Commission tries to preserve the positive effects of selective distribution. This thesis describes and examines the practical use of selective distribution systems. Different reasons for companies to use selective distribution systems and effects of the new BER and Guidelines are in particular examined.