Block Exemption Research Articles

Evading Portfolio Royalties for Standard-Essential Patents Through Validity Challenges

A no challenge clause prevents a patent licensee from challenging the validity of a licensed patent. In the 2014 Guidelines on Technology Transfer Block Exemption Regulation, the European Commission discouraged parties from including a no challenge clause in a settlement and license agreement concerning standard essential patents (SEPs). The Commission said that eliminating invalid patents serves the public interest because it promotes competition. For similar reasons, in 2014, the Advocate General of the Court of Justice of the European Union opined in Huawei Technologies Co. v. ZTE Corp. that EU competition law should allow a licensee to retain the right to challenge a licensed SEP’s validity notwithstanding that the licensee has entered into a settlement and license agreement with the SEP holder. I analyze the Commission’s and the Advocate General’s assumption that a licensee’s challenging the validity of SEPs unambiguously benefits consumers. I assess the merits of that legal proposition within the well established economic framework of cost benefit analysis. I particularly focus on the marginal benefits and the marginal costs that eliminating no challenge provisions would generate for consumers. I explain that the Commission and the Advocate General exaggerated the marginal benefits and understated the marginal costs of validity challenges to licensed SEPs, particularly when the typical SEP holder repeatedly licenses its SEPs in a large portfolio to a sophisticated licensee. The discovery that several SEPs in a licensed portfolio of hundreds are invalid would neither surprise the parties nor justify reducing the portfolio royalty. The Commission and the Advocate General ignored that encouraging a licensee to challenge the validity of individual licensed SEPs invites opportunistic litigation by the licensee so as to delay paying the SEP holder the agreed-upon royalty for the use of the many more valid patents in its licensed portfolio. Thwarting the SEP holder’s ability to receive prompt compensation for its innovative contribution lessens the SEP holder’s incentive to invest in innovation and thus decreases quality of collective standard setting. Those effects in turn impose significant marginal harm on consumers. Consequently, the Commission and Advocate General erred to assume that consumers derive a net marginal benefit from the announced policy encouraging a licensee to challenge to the validity of licensed SEPs.

Investment State Aid for Ocean Energy Projects in the EU:

Ocean energy techniques (including tidal energy, wave energy, and salinity gradient energy) can play an important role with respect to the achievement of the Member States’ specific renewable energy targets set by the Renewable Energy Directive. In 2016, the EU's Ocean Energy Forum reported that EU State aid guidelines remain ‘burdensome and restrictive.’ This article argues that the State aid framework would indeed be too restrictive if it were to prevent those renewable (ocean) energy projects which are important for achieving a Member State’s renewable energy targets from sourcing sufficient funding. This would imply a lack of integration between State aid and renewable energy policy. It is concluded that while most conditions of the General Block Exemption Regulation and the Commission Guidelines on State aid for environmental protection and energy hardly seem to be burdensome, the State aid framework’s proportionality criteria may form a restriction to pre-commercial ocean energy projects. This article’s main suggestion is to solve this possible lack of integration by making the balancing test under the Guidelines more flexible for those situations where the State aid framework prevents important renewable (ocean) energy projects from sourcing sufficient funding. Also, two alternative solutions are discussed: improving access to finance for SMEs in the field of ocean energy, and providing for sufficient investment aid on the EU level.

Nullity Under Art. 101(2) TFEU

The paper discusses the characteristics of the Article 101(2) TFEU nullity compared to the concepts of nullity in civil law in Belgium, the Netherlands, France and Germany as well as to the concept of non-bindingness in EU consumer law. The Article 101(2) TFEU nullity is an autonomous EU private law sanction. It applies to agreements and decisions infringing Article 101(1) TFEU and not satisfying the requirements of Article 101(3) TFEU. In the case of concerted practices, the act of concertation is not a legal act so there is no need to declare it void. The validity of any legal acts concluded between one of the concerting undertakings and one or more third parties is not a matter of EU law, but of national law. The nullity is automatic; this means that it applies ex lege, no prior court decision being required. The extent to which the Article 101(2) nullity may be invoked by national courts ex officio is disputed in legal scholarship. It seems to follow from the case law of the Court of Justice that such an obligation does exist, except where examination of the issue of breach of Article 101 would oblige them to abandon the passive role assigned to them by going beyond the ambit of the dispute defined by the parties themselves and relying on facts and circumstances other than those on which the party with an interest in the application of those provisions bases his claim. In particular, the duty of national courts to apply Article 101(2) ex officio does not seem to interfere with the rules of Article 2 Regulation 1/2003 regarding the burden of proof. The absolute character of the nullity means that the null agreement or decision has no effects between the parties or regarding third parties. Under EU law as opposed to Belgian and French law, the duty to apply Article 101(2) ex officio is rather related to the automatic character of the nullity than to the absolute character of the nullity. The CJEU has recognized that the Article 101(2) nullity may have retroactive effects. This does not mean however that nullity always implies that the act is deemed never to have existed. The act only becomes null and void as of the moment it infringes Article 101(1) TFEU and does not satisfy the requirements of Article 101(3) TFEU. The question whether an act that at one point was null for this reason can revive later on, when it no longer infringes Article 101(1) TFEU or satisfies the requirements of Article 101(3) TFEU, is disputed. It is standing case law of the CJEU that the automatic nullity provided for in Article 101(2) TFEU affects a contract in its entirety only if the clauses which are incompatible with Article 101(1) TFEU are not severable from the contract itself. Otherwise, the consequences of the nullity, in respect of all the other parts of the contract, are not a matter for Community law. The CJEU has not laid down a criterion for severability itself. In case law and legal scholarship the dominant opinion seems to consider that severability is to be determined according to national rules. German scholars however regard the issue of severability as an issue of EU law. Only when the anticompetitive clause is severable from the remainder of the agreement they use §139 to determine whether the nullity is to be extended to the remainder of the contract. National legal systems generally accept the validity of severance clauses, although in Germany they only lead to a reversion of the burden of proof under §139 BGB. According to the Court of Justice it is up to the national law to determine whether the parties may amend their contract in order to prevent it from being void, for example by replacing the void clause by one that is exempted under a block exemption regulation. The Court of Justice did not make an explicit statement about the power of national courts to amend an anticompetitive agreement. In my opinion, chances are significant that the Court would also leave this up to the national legal systems. Currently, Dutch law prohibits such judicial intervention. In Belgium, judicial conversion has long been prohibited, but recently the Belgian Supreme court accepted it, albeit not in a competition law related case. German case law and legal scholarship is divided about judicial conversion, but accepts the application of concrete modification clauses. Although there are certain similarities between the nullity under Article 101(2) TFEU and the concept of non-bindingness under the UCTD, the Article 101(2) nullity and the UCTD’s non-bindingness are two distinct concepts which derive their characteristics from their own distinct purposes: the protection of free competition in the case of Article 101(2) and consumer protection in the case of the UCTD.

Efektywność udzielania pomocy publicznej w państwach członkowskich UE – mit czy rzeczywistość?

The purpose of the article is to demonstrate the acceptability of State aid in the EU member states, with particular regard to implementation regulations adopted by the European Commission in 2008 and 2014 on State aid provided on the basis of block exemptions. Applying this principle makes it possible to release the Member States from the obligation to notify the Commission of numerous state aid measures. The implementation of the General Block Exemption Regulation (GBER) has been one of the major components of the reform of the State aid system undertaken by the Commission in the recent years.

European Union Competition Law Developments in the Aviation Sector: July to December 2016

The second half of 2016 has seen a myriad of competition law developments relevant to the aviation sector. This article summarizes the main competition law developments over the past six months and provides the reader with greater detail of each of these developments. The European Commission (hereinafter ‘Commission’) began a second consultation on its proposed reform of the 2014 State aid General Block Exemption Regulation. In particular, the proposed reforms would expand the current exemptions and compensation schemes in relation to, for example, small airports. Another major development is the legal challenge brought by Deutsche Lufthansa (hereinafter ‘Lufthansa’) against the Commission’s refusal to grant a partial waiver of the conditions the Commission imposed as part of its approval of Lufthansa’s takeover of Swiss International Airlines in 2005. The unprecedented appeal would, if successful, lift various requirements currently applying to the fares charged by Lufthansa on certain routes. In addition, the Brexit Competition Law Working Group (BCLWG) has published notes of two roundtable discussions on the antitrust and merger issues resulting from the United Kingdom’s (UK) referendum result to leave (‘Brexit’) the European Union (EU). In particular, the BCLWG discussed the implications of Brexit on the ‘one stop shop’ principle, on pan-European investigations and on the possibility of introducing public interest considerations in merger assessments. The UK’s withdrawal from the EU has the potential to effect a seismic change in the general competitive landscape of the UK and more generally across the EU aviation industry.

The Ripple Effects of Online Marketplace Bans

The strive for tighter control of distribution, quality and price – has led an increasing number of producers to include restrictions on the use of online marketplaces in their selective distribution agreements. This article considers the effects of such restrictions and the legal approach they call for. While acknowledging the legitimacy of proportionate restrictions on distribution, the article illustrates how an absolute ban on the use of online marketplaces may have a detrimental effect on market transparency, price competition, entry and expansion. The discussion illustrates how the legitimate interests of producers may be protected through less onerous means, without the increase in consumers’ search costs and the dampening of price competition. With that in mind, it is argued that these restrictions should be analysed on a case-by-case basis and should not benefit from the Vertical Block Exemption. Furthermore, the article considers whether absent proportionality and objective justification, the harmful effect of online marketplace bans, justifies their condemnation as anticompetitive by object.

The Ripple Effects of Online Marketplace Bans

The strive for tighter control of distribution, quality and price - has led an increasing number of producers to include restrictions on the use of online marketplaces in their selective distribution agreements. This paper considers the effects of such restrictions and the legal approach they call for. While acknowledging the legitimacy of proportionate restrictions on distribution, the article illustrates how an absolute ban on the use of online marketplaces has a detrimental effect on market transparency, price competition, entry and expansion. The discussion illustrates how the legitimate interests of producers may be protected through less onerous means, without the increase in consumers’ search costs and the dampening of price competition. With that in mind, it is argued that these restrictions should be analysed on a case-by-case basis and should not benefit from the Vertical Block Exemption. Furthermore, the article considers whether absent proportionality and objective justification, the harmful effect of online marketplace bans, justifies their condemnation as anticompetitive by object.

UK Venture Capital Tax Relief Schemes After Brexit

Originally published as Finance Act commentary in the British Tax Review this paper begins by briefly examining four technical changes to the UK EIS, SEIS and VCT venture capital tax reliefs made by the UK Finance Act 2016. Detailed consideration is then given to the implications that the UK leaving the European Union might have for the future parameters of these tax reliefs. Written on 31st October 2016 the analysis primarily anticipates that either the UK will sever its ties to the EU without an exit deal of any sort being concluded, or that the UK’s departure from the EU will be facilitated by way of an EU/Canada style trade treaty incorporating the WTO 1994 Uruguay Round Subsidies and Countervailing Measures Agreement. The impact of the EU State aid rules manifested in the Risk Capital Guidelines and the General Block Exemption Regulation are compared and contrasted with those of the WTO SCM agreement. The discussion centres particularly on the constitution of a WTO subsidy in terms of benefit flow-through and the respective concepts of EU selectivity and WTO specificity, concluding that there are a number of significant ambiguities concerning the potential WTO treatment.

WILL TRADESMAN COLLECTIVE WAGE AGREEMENT BE EXEMPTED FROM THE HONG KONG COMPETITION ORDINANCE?

Tradesman Collective Wage Agreement (TCWA) has been used for construction tradesmen for many years. This would ensure the daily wage for qualified tradesmen will not fall below the agreed level. On 14th December 2015, the Hong Kong first ever Competition Ordinance (HKCO) came into effect. Under the First Conduct Rule (Section 6 of the HKCO), an undertaking must not (a) make or give effect to an agreement; (b) engage in a concerted practice; or (c) as a member of an association of undertakings, make or give effect to a decision of the association, if the object or effect of the agreement, concerted practice or decision is to prevent, restrict or distort competition in Hong Kong. Moreover, Section 15 of HKCO allows exemption for agreements that fulfil certain criteria such as economic efficiency and public policy. This study finds that TCWA will likely violate the First Conduct Rule due to its price fixing effect. Moreover, TCWA can apply for block exemption under Section 15 of the HKCO on the ground of engendering economic benefits. Reference is also made to the first application for exemption under the HKCO to illustrate the key arguments.

Study on Economic Regulation of Collaborative Strategies among Container Shipping Companies Following Repeal of European Union Regulation 4056/86

ABSTRACT The European Union removed the block exemption granted under Regulation 4056/86, to liner shipping companies to provide scheduled services on a collaborative basis effective October 2008. This has also been followed by the proposed P3 alliance with participation of Maersk, MSC and CMA CGM. This paper explores, the arguments adopted by the US Federal Maritime Commission, the European Commission and the Ministry of Commerce of China, in rejecting the case proposed by the P3 alliance. The findings of this paper will inform on understanding strategies adopted by major Competition Regulatory authorities in their interpretation of horizontal collaboration in the industry.

EU Competition Rules in the Insurance Sector: A Different World in Change

Although the insurance industry is subject not only to its sector-specific legal framework and commercial peculiarities, it is also a very different world with regard to European competition law and practice.1 The amount of sector-specific co-operation is, at best, only comparable to the banking sector. The European Commission (Commission), in the past, has acknowledged that co-operation in the industry can enhance efficiency, for instance by helping insurers to share large and unpredictable risks or to gain better understanding of certain specific risks.2 Like in the banking and other heavily regulated sectors, the majority of sector-specific co-operation of the insurance industry has never been expressly exempted from the ban of restrictive agreements in Art. 101 para. 1 TFEU. Although this fact leads to legal uncertainty and some administrative proceedings as well as to long-standing discussions between stakeholders and competition authorities as well as in academic literature, in most cases apparently workable solutions were found. However, new considerations by the Commission not to renew the still existing Block Exemption Regulation (BER) that contains rules on co-operation in the fields of joint compilations, tables and studies3 that require specific risk-related information exchange and common coverage of certain types of risks (‘co-(re)insurance’) may lead to yet unknown and possibly undesirable effects of the competitive structure of the European insurance industry.

Evading Portfolio Royalties for Standard-Essential Patents through Validity Challenges

A no-challenge clause prevents a patent licensee from challenging the validity of a licensed patent. In the 2014 Guidelines on Technology Transfer Block Exemption Regulation, the European Commission discouraged parties from including a no-challenge clause in a settlement and license agreement concerning standard-essential patents (SEPs).The Commission said that eliminating invalid patents serves the public interest because it promotes competition. For similar reasons, in 2014, the Advocate General of the Court of Justice of the European Union opined in Huawei Technologies Co. v. ZTE Corp. that EU competition law should allow a licensee to retain the right to challenge a licensed SEP’s validity notwithstanding that the licensee has entered into a settlement and license agreement with the SEP holder. I analyze the Commission’s and the Advocate General’s assumption that a licensee’s challenging the validity of SEPs unambiguously benefits consumers. I assess the merits of that legal proposition within the well-established economic framework of cost-benefit analysis. I particularly focus on the marginal benefits and the marginal costs that eliminating no-challenge provisions would generate for consumers. I explain that the Commission and the Advocate General exaggerated the marginal benefits and understated the marginal costs of validity challenges to licensed SEPs, particularly when the typical SEP holder repeatedly licenses its SEPs in a large portfolio to a sophisticated licensee. The discovery that several SEPs in a licensed portfolio of hundreds are invalid would neither surprise the parties nor justify reducing the portfolio royalty. The Commission and the Advocate General ignored that encouraging a licensee to challenge the validity of individual licensed SEPs invites opportunistic litigation by the licensee so as to delay paying the SEP holder the agreed-upon royalty for the use of the many more valid patents in its licensed portfolio. Thwarting the SEP holder’s ability to receive prompt compensation for its innovative contribution lessens the SEP holder’s incentive to invest in innovation and thus decreases quality of collective standard setting. Those effects in turn impose significant marginal harm on consumers. Consequently, the Commission and Advocate General erred to assume that consumers derive a net marginal benefit from the announced policy encouraging a licensee to challenge to the validity of licensed SEPs.

IMPACT OF REPEAL OF CONFERENCE ON EUROPEAN LINER MARKET

In September 2006 the European Council decided to repeal Regulation 4056/86 with effect from October 2008. The primary issue addressed in this study is the impact of repeal of block exemption in Europe on two major Europe-based trades – the United States/North Europe trade and the Far East/North Europe trade. This paper measures empirically the economic impact of the repeal of conference on competition of EU liner shipping. Adam Smith’s theory of joint products is adopted to examine the impact of the repeal after 2009. This paper considers head haul and backhaul container shipments as joint products. Two statistical equations are employed to reinterpret Smith’s condition of joint products. Analysis results using available information from 2010 through 2012 reveal that the EU’s repeal of conference produced a striking difference in how carriers react to deregulation reform in the two major Europe-based trade lanes.

Multichannel Distribution and the Impact of ‘Footloose’ Consumers

At a recent conference, I addressed the need to shape and sharpen the debate on the appropriate competition regime for the age of on-line distribution. The world has changed. On-line sales and ‘platformisation’ have opened multiple new distribution dimensions that may require a fresh look on the application of competition rules. The scale and speed at which businesses and consumers can process information are unprecedented, and with that the impact of issues like information asymmetry and free-riding may take on a different level of significance. A lot of study has been devoted to the way internet shapes distribution both from the business and consumer perspectives. The potential effects of increased transparency, lower search costs, and network effects have been well described. However, in my opinion, the impact of the rapid evolution of the consumers’ role is underexposed in the debate on the appropriate competition regime. Consumer behaviour today is no longer comparable with the Grundig–Consten era. Nor is it comparable with the time of drafting the Block Exemption on Verticals, nor even the time the Block Exemption was revised in 2010. I believe that the debate would benefit from a clear consumer welfare perspective. What is driving business response to the opportunities and challenges that internet offers? Is the business response aimed at legitimately protecting investments that benefit consumers, or is it, in a harmful way, aimed at shielding itself from strong price competition? There are two developments which I find very interesting from an enforcement perspective. Firstly, the internet has revolutionised the way consumers search and compare when shopping. A good example is the development of personalised shopping comparison applications for mobile phones. With such an app, consumers can, while in a shop, scan a product’s barcode and get an instant overview of the price of the product in competing shops. Consumers can then decide on the spot where to buy. They can purchase in the shop if they like the offer. Or, they can immediately purchase at an on-line competitor through the app, and the goods might even be shipped before they leave the store. Or, they could try and negotiate better terms with the shop owner. Such applications have existed for some time. What is striking is the rapidity with which they are becoming mainstream. A prime-time commercial was recently aired on Dutch national television for such a ‘free’ comparative shopper app. The app ranked high in the App store and in Google play. With apps like this, consumers gain bargaining power. We know that this is essentially a good thing. However, we also know that there are consequences for producers and distributors. To what degree will retailers be prepared to invest in services for products that require presales services? Or, for luxury products, where a shop experience is deemed essential? With today’s technology, high smartphone penetration and ubiquitous broadband connections, it is extremely easy for competing on-line shops to lure consumers away with even a slightly lower price. Consumers are becoming footloose, instantly and on a large scale. As a result, the possibilities for competing retailers to free-ride on shop investments are growing at an unprecedented pace. We cannot ignore the potentially negative impact on investments that may result. Secondly, Platformisation, a term used by Hederstrom and Peeperkoorn in a recent article in this Journal, describes the phenomenon that platforms are becoming more and more essential for on-line trade. I think that the importance of consumer data for many on-line platforms brings legitimate concerns. While competition and privacy interests may coincide, they may at times also conflict. For example, on-line platforms may have an incentive to reserve consumer data for their own use. Competitors may face an unsurmountable barrier if certain data are really crucial to their business but are

Regional State Aid Control in Europe: A Legal and Economic Assessment

This paper provides a legal and economic analysis of the European rules for regional state aid according to Article 107 (1) and (3) TFEU. It summarizes the historical evolution and the trends of regional aid rules and describes the economic rationale behind them. The main principles are discussed with reference to recent academic research, leading cases and the State Aid Modernization initiative (“SAM”). The current rules for the assessment of compatibility as laid down in the general block exemption and the regional aid guidelines 2014 are critically reviewed in light of these principles.

The 2014 Block Exemption Regulation of State Aid Control in the EU

유럽연합은 경쟁법(Competition Law)을 통해서 회원국들의 정부보조금을 규제하고 있다. 특히 각 회원국으로부터 지원을 받는 개별 사업자는 관련 시장에서 특별한 우위를 점할수 있으며, 이는 경쟁뿐만 아니라 무역에도 부정적인 영향을 준다. 그러므로 유럽연합에서는 정부보조금 관련 경쟁법을 적용하여 정당화 사유가 없는 경우 반경쟁적 보조금을 원칙적으로 금지하고 있다. 유럽연합의 정부보조금규제는 역내시장의 순기능을 보장하는 것에 그 목적을 두고 있다. 따라서 이러한 규제를 통해 시장진입장벽을 제거하고 경쟁을 제한하는 것을 금지할 수 있다. 법적구속력이 있는 유럽연합법(EU Law)을 통한 정부보조금규제가 유럽연합에서는 국제법 및 행정법의 성격을 동시에 갖는 법체계의 하나로서 중요하게 인식되고 있는 반면, 우리나라에서는 크게 다루어지지 않고 있다. 그러나 유럽연합의 회원국으로부터 정부보조금 수혜를 받는 우리나라 기업들이 등장하면서 향후 유럽연합 정부보조금규제에 대한 연구수요가 증가할 것으로 예상한다. 또한국제무역규범에서의 정부보조금규제와 관련하여 모범이 되고 있는 유럽연합의 규칙은 우리나라에서도 연구가 필요하다. 무엇보다 한-EU 자유무역협정에는 경쟁조항에 정부보조금의 내용을 담고 있는데, 이는 유럽연합법에서의 정부보조금규제를 포함한 경쟁조항을 그대로 본받은 것이라 할 수 있다. 그러므로 실무적·학문적 측면에서 향후 유럽연합 정부보조금규제의 발전내용을 중요하게 연구해야 할 것이다. 이 연구는 유럽연합 정부보조금관련 법체계에 대해서 알아보고, 2014년 개정된 정부보조금 일괄적용제외규정에 대해서 소개하고 특징을 논하고자 한다. 또한 개정된 유럽연합규칙을 통해 경쟁법적 특징인 법의 목적으로서의 질서자유주의 배경과 발전에 대해서도 논의하도록 한다.

VERTICAL RESTRAINTS ON E-COMMERCE AND SELECTIVE DISTRIBUTION

This paper discusses whether, when manufacturers choose to adopt a selective distribution system, vertical restraints imposed on electronic commerce (e-commerce) may work in the interest of consumers or have anticompetitive consequences that require an antitrust intervention. The paper presents the basic economic concepts that apply to vertical restraints, and identifies the efficiency reasons and the anticompetitive effects that may motivate their adoption. Then, the relevant economic literature is surveyed in order to understand how e-commerce influences retail competition, taking into account its impact on search costs, distribution costs, and information asymmetry. The paper examines the legal treatment of vertical restraints on e-commerce in the case of selective distribution; it summarizes the position expressed by the European Commission in the Block Exemption Regulation and the accompanying guidelines, and then discusses some cases decided by National Competition Authorities, National Courts, and the European Courts. From this overview emerges the risk that the antitrust analysis of vertical restraints on e-commerce in selective distribution systems may be guided by presumptions that do not have solid economic grounds. The paper argues that it is unwise to adopt a formal approach for the legal assessment of these vertical restraints and calls for a more economic effect-based approach.

The Influence of the Chicago School on the Commission's Guidelines, Notices and Block Exemption Regulations in EU Competition Policy

AbstractAntitrust rules are fundamentally informed and shaped by economic theories. Given the significance of EU competition policy for the European integration process, it is essential to disentangle the economic theories underlying EU competition law. There is abundant theoretical and empirical literature examining the influence of ordoliberalism on EC/EU competition policy. However, in recent years, ordoliberal principles appear to have been replaced by neoliberalism and efficiency‐enhancing rationale in EU competition policy. This article puts forward the idea of clarifying whether the European Commission incorporates Chicago School theory into EU competition law provisions. The analysis is carried out on the basis of the European Commission's guidelines, notices and block exemption regulations. The analysis reveals that the Commission does, to a considerable extent, follow the Chicago School theory. The elements of the Chicago School theory hold strongest in vertical practices; they are somewhat weaker in horizontal practices and in unilateral exclusionary conduct.

Key Developments in State Aid Law

In addition to the revised General Block Exemption Regulation, the European Commission has adopted various new guidelines as part of its State aid modernisation programme. Another major innovation of the last 12 months is the notice on State aid, which is due to be adopted formally at the beginning of 2015. In terms of case law, the developments in the last 12 months are an evolution rather than a revolution but with some interesting and elucidating rulings on aspects of the notion of State aid and its enforcement.

Why the discriminatory application of criteria in selective distribution systems is block exempted under Regulation 330/2010

This article examines to what extent the discriminatory application of criteria in selective distribution systems is block exempted under Regulation 330/2010. First, the author argues that discrimination is unlikely to occur within the market share thresholds of Regulation 330/2010. In addition, the point is made that Article 101 TFEU can only be used to deal with the discriminatory application of criteria in very limited scenarios. Also, arguments are presented that show there is little doubt that the Commission considers the discriminatory application of criteria as block exempted even if Regulation 330/2010 and the accompanying guidelines are not particularly clear. Finally, the author argues that the recent CJEU Auto 24 judgment allows for the discriminatory application of criteria and is equally applicable to Regulation 330/2010. The author concludes that in the context of the block exemption provided by Regulation 330/2010, a supplier is free to discriminate in the application of its selective distribution criteria.