Explanatory note

This Order is a block exemption Order under section 6 of the Competition Act 1998 (“the Act”). It gives effect to the Competition and Markets Authority’s (“CMA”) recommendation that certain vertical agreements (as defined in the Order) constitute a category of agreements which are likely to be exempt agreements as a result of section 9 of the Act. Agreements which fall within the category specified in the block exemption Order are exempt from the prohibition in Chapter 1 of the Act.

The recommendation was made by the CMA following consultation in accordance with section 8(1) of the Act.

The block exemption applies to such agreements to the extent that they fall within the scope of section 2 of the Act (agreements etc. preventing, restricting or distorting competition (the Chapter 1 prohibition)).

The block exemption applies from 1st June 2022 and will cease to have effect on 1st June 2028 (see article 16).

The block exemption does not apply if the conditions relating to market share (see article 6) or inclusion of hardcore restrictions (see article 8) are not met, or if the vertical agreement contains a excluded restriction which is not severable from the agreement (see article 10).

The block exemption can cease to apply before 1st June 2028 for some agreements if:

• the annual turnover of any individual member of an association of undertakings (together with its connected undertakings) exceeds £44 million (see article 3(3)), although the threshold may be exceeded by up to 10% for up to two consecutive financial years (see article 4(2));

• there is a breach of the condition relating to market share in article 6 (see article 9);

• the CMA cancels the effect of the exemption:

  • because of a failure of an undertaking to provide it with information about the agreement (see article 12(2));

  • because it considers that a particular agreement is not one which is exempt from the Chapter 1 prohibition as a result of section 9 of the Act (see article 13(1)).

The CMA is given a power to ask for information about agreements to which a person is a party (see article 12(1)).

A transitional provision also ensures that the Chapter 1 prohibition does not apply for 12 months to pre-existing agreements which satisfied the conditions for exemption provided for in Commission Regulation (EU) No 330/2010 of 20 April 2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to categories of vertical agreements and concerted practices (EUR 2010/330) but which do not otherwise satisfy the conditions for exemption provided for in this Order (see article 15).

Guidance on the block exemption is available from the CMA online at http://www.gov.uk/cma or by writing to Competition and Markets Authority, The Cabot, 25 Cabot Square, London E14 4QZ.