Vertical restraints block exemption

The replacement of the motor vehicle block exemption is complicated by the fact that the vertical restraints block exemption - Regulation 2790/1999 - expires at the same time as Regulation 1400/2002 was due to expire. Suggestions that vehicle distribution be brought under the general Regulation from next May were difficult to assess when we could not be sure what the latter regulation would say.

The issue has not gone away, but it has become a little clearer recently with the publication of the Commission's proposals. Most significantly, it says that Regulation 2790 is "working well and should not be fundamentally modified". But having said that, it proposes that exemption should apply only where the market shares of both parties are under 30 per cent, which will import buying power issues into the antitrust analysis needed to determine whether an agreement is allowed or not. (At present, Regulation 1400 focuses only on the market share of the supplier - that is, the manufacture or importer.)

The Commission also proposes stricter and more detailed rules on online sales, especially in selective distribution systems. Given that selective distribution is still the choice of virtually the entire car industry, and the Internet has had a significant impact (so the Commission believes) on the car market, this is likely to be a significant development.

The presumption against resale price maintenance - regarded, rightly, as a hardcore restriction on competition by both regulations - will be made easier to rebut where the Commission is assessing an efficiency defence. It is not inconceivable that even RPM can be justified (as the publishing industry, prior to the abolition of the Net Book Agreement!).

Finally, and this is going to take me some time to work out so let me come back to it, the Commission will introduce rules on category management and upfront access payments such as slotting allowances.

The Commission's proposals are open for public consultation until 28 September, and the new regulation will probably remain in force until 2020. Of course, the consultation should now be considered as part and parcel of the consultation on the motor industry regulation.