14 Sep Cma Guidance Vertical Agreements
2.8 What is the role of market share in the review of a vertical agreement? An agreement is inconsedible if it inherently harms the proper functioning of competition. The most common example in a vertical context is RPM. The CMA has imposed multi-million pound fines on suppliers that have limited retailers` ability to grant discounts (Guitars, £4.53 million, 2020) and imposed a “minimum price for advertised prices” policy on retailers (commercial catering equipment, £2.30 million, 2016). In 2019, the CMA also fined RPM £3.70 million to hacker and keyboard maker Casio and found that Casio had used software to monitor online prices in real time and ensure retailer compliance. Indeed, CMA`s thorny two-year operation on RPM has collected nearly £14 million in fines in the musical instrument sector. On June 29, 2020, in addition to the announcement of the latest of these fines, the CMA also set up its own internal price monitoring tool, which will deter companies from participating in RPM, and give the CMA “a better idea of the sectors it faces”. Suppliers` market shares will be relevant for determining whether a restriction creates an sensible restriction of competition and whether a restriction could fall within the safe ports created by the de minimis notice or by the vertical block exemption. The UK Vertical Guidelines state that `vertical agreements generally do not raise any competition concerns unless one or more of the parties to the agreement have market power in the relevant market or the agreement is part of a network of similar agreements`. In the section on the calculation of the market share threshold (paragraphs 89 to 95), the Commission now clarifies that agreements concluded between an association of retailers and its individual members are the unification of the supplier and that account should be taken of the common market share of its members. In line with the modernisation reforms implemented by the European Union in May 2004, the United Kingdom abolished the notification system that previously existed under the CA. Subject to requests for consultation in new cases (see question 48), it is therefore not possible to notify a vertical restraint. However, it is possible to apply to the CMA for immunity from fines in respect of the practices of the MPR (see questions 19 and 52). Has your jurisdiction raised any other important issues regarding the application of competition law to vertical agreements in digital markets? Ca98 prohibits agreements between undertakings, decisions of associations of undertakings or concerted practices which may affect trade in the United Kingdom and which have as their object or effect the preventing, restricting or distorting competition in the United Kingdom (the “Prohibition in Chapter I”).
If, in cases of RPM, fines are the main sanction, a vertical agreement contrary to the Prohibition of Chapter I is generally null and void and unenforceable, unless the hurting clause is separable according to the “blue pencil” approach (in this case, only this clause would be unenforceable, the rest will survive). . . .