Public consultation on the draft guidelines for information exchange in the context of dual distribution

As a reminder, “dual distribution” refers to the scenario where a supplier sells goods or services not only, at the upstream level, through independent distributors, but also at the downstream level, directly to end customers, thus competing with its independent distributors.

The revised draft of the Vertical Agreements Exemption Regulation No. 330/2010 published on July 9, 2021 proposed to limit the safe harbor for dual distribution, by introducing several conditions allowing this vertical agreement to benefit from the block exemption, with the exception of the exchanges of information between the parties which will be assessed under the rules applicable to horizontal agreements.

Comments received by the European Commission (hereinafter the “Commission”) during an initial consultation, which took place between July and September 2021, highlighted the lack of guidance on the types of information that can be exchanged between a supplier and a buyer in a dual distribution scenario.

On February 4, the Commission invited stakeholders to comment on guidance on information exchange in the context of dual distribution, which is intended to be added to the vertical guidelines^[1].

The draft now provides that the exemption will apply to all aspects of the vertical agreement in question, “including any exchange of information between the parties that is necessary to improve the parties’ production or distribution of the contract goods or services.”

According to the Commission, the assessment of whether the exchange of information is necessary to improve production or distribution may depend on the type of distribution network in which the parties are involved and provides in any event a non-exhaustive list of information that qualifies for exemption (e.g. technical information, supply information, recommended prices) and conversely those that are generally excluded and will have to be assessed individually under the rules applicable to horizontal agreements.

The Commission’s clarification of the exchange of information in the context of dual distribution is obviously to be welcomed, but it does not provide all the legal certainty expected insofar as the “non-exhaustive” list of clauses established leaves the door open to a certain unpredictability.

It is also curious that certain information is included in the list of information that can benefit from the exemption, in particular that relating to recommended resale prices, insofar as this could obviously increase the risks of collusion within a distribution network.

^[1] “Draft new section dealing with information exchange in dual distribution”, published on February 4th, 2022.