<p>Vertical agreements are of fundamental importance to the international commercial trade in goods and services. By such agreements products or services from country “A” may be efficiently “distributed” by the manufacturer or supplier to a dealer, franchisee or agent located in country “B” for sale or supply in that country. A network of such agreements can provide a viable method of vertically distributing goods and services throughout a territory as wide as that comprised by the European Union. From the perspectives of a supplier and a dealer such a vertical distribution agreement should allow for enhanced control over the goods or services by the supplier which may then lead to increased coherence concerning the nature of the respective obligations of supplier and dealer, thereby allowing better forward planning by each party concerning the financing of their future commercial operations.</p>
<p>To the extent that such an arrangement ensures that the supplier can sell goods or supply services across national borders to a distributer, franchisee or agent who can then sell to consumers who are thus able to access the product within their own State on economically efficient terms, it would appear that all levels in the supply chain should be content with the consequences of such a vertical “distribution” agreement. Indeed, when transposed to the European Union such a state of affairs would appear to be a most desirable means of furthering interstate trade and with it commercial integration within the Common Market. This optimistic assessment is however flawed not only because it assumes the parties to the vertical agreement will only act selflessly but also because it disregards competition and the interests of competitors at every level of the vertical agreement.</p>
<p>The European law concerning such vertical agreements seeks to allow the potential benefits which may flow from these contracts while avoiding the injury to competition which unrestricted vertical agreements might cause by, for example, seeking to privately re-partition the Common Market. To discourage the contracting parties from adopting terms and conditions which would feature such negative aspects of vertical agreements the European Commission has created a variety of block exemptions which, if properly followed, allow qualifying contracting parties who conclude qualifying vertical agreements a comparatively simple access at the point of drafting the agreement to the “safe harbour” of an exemption...</p>
