What Is Considered Vertical Agreement

Posted by Admin on Apr 15, 2021 in Uncategorized |

On 13 January 2014, the Commission announced that it had launched a formal procedure to review licensing agreements between several major US film studios and Europe`s largest pay-TV companies, as licensing agreements could hamper the provision of pay-TV services beyond EU borders. In July 2016, the Commission agreed that one of the US film studios under investigation, Paramount, was not obliged to ban passive sales of a European pay-TV company outside its licence territory or to grant absolute territorial protection in that area for a period of five years. In its decision, the Commission found that the contentious clauses contained in Paramount`s licensing agreements were anti-competitive in nature, as they were intended to prohibit or limit passive cross-border sales and to grant absolute territorial exclusivity with respect to Paramount`s content. The Commission`s investigation into several other major US film studios and Europe`s largest pay-TV companies, including Canal Plus, which filed a motion in December 2016 to quash the Commission`s decision to accept Paramounts` commitment, continued. However, in December 2018, the Tribunal dismissed the appeal and found that the licensing agreements at issue, by preventing any pay-TV company from passively selling to customers outside its territory, imposed restrictions that went beyond simply protecting the studio`s intellectual property rights and thus constituted restrictions on competition. By the end of 2018, the Commission had opened consultations on similar commitments made by the other five studios studied. In addition, vertical agreements appear to be more effective in commercial activity. The most common vertical restrictions are: the Commission considers that setting minimum resale prices is an essential restriction of competition. As such, it almost always falls under Article 101, paragraph 1, de minimis communication and vertical category exemption outside safe ports, and is generally considered unlikely to benefit from an exemption under Article 101, paragraph 3. The category exemption for EU vertical agreements exempts certain vertical agreements from the prohibitions covered by Chapter I or Article 101. While the category exemption applies to vertical agreements for the agreement in question, there is no need for further consideration of the agreement from a competition perspective. However, if the class exemption is not applicable, the Chapter I or Section 101 agreement needs further review to determine whether the agreement raises anti-competitive concerns.

A “shooting finding” would not, in principle, exclude the benefit of the category exemption.

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