The CMA is working on the new UK block exemption at the same time as the European Commission is consulting on revisions to its block exemption and guidelines. It is believed that both the new UK and the revised EU block exemption will enter into force at the same time.
What can be expected from the UK’s new block exemption:-
– The structure of the two block exemptions will remain the same as will the 30% market share threshold, the prohibition on resale price maintenance and the maximum duration of both in-term non compete/exclusive supply provisions and post term non compete obligations.
– It is expected that the major changes will relate to:-
– On line sales – Because on line retailing has become well established it is likely that two elements of on line sales will cease to be “hardcore” restrictions – dual pricing and the imposition of different criteria for on line sales and bricks and mortar sales.
– Territorial restrictions – Additional exceptions will be added to allow the combination of exclusive and selective distribution in a territory and the allocation of an “exclusive” territory to more than one distributor or franchisee. There will also be definitions of “active” and “passive” selling.
In addition to the above, the CMA has concluded that dual distribution should remain exempted. Finally, it is envisaged that the CMA will have greater powers to request information from parties to vertical agreements and to withdraw exemption in individual cases. It is also envisaged that clauses which prevent a supplier from offering their products to others on more favourable terms, would also become a hardcore restriction.
A further update will be produced when the draft UK block exemption is published.
John Pratt, IDI Country Expert for franchising in UK