Insights Government consults on new draft Vertical Agreements Block Exemption Order

In November 2021, following a consultation, the Competition and Markets Authority recommended that the Secretary of State for Business, Energy and Industrial Strategy replaces the current Vertical Agreements Block Exemption Regulation, which was retained from EU law when the UK left the EU and is due to expire on 31 May 2022, with a UK Vertical Agreements Block Exemption Order that will last for six years. The CMA did not consider it appropriate to introduce fundamental changes to the current exemption, but it proposed some important amendments.

The Government has now published the Competition Act 1998 (Vertical Agreements Block Exemption) Order 2022 for consultation. The Order gives effect to the CMA’s recommendation and ensures that certain specified agreements are exempt from the prohibition in Chapter I of the 1998 Act, which prohibits agreements between undertakings that prevent, restrict or distort competition.

The Government says that the purpose of the Order is to ensure that businesses are not prevented or disincentivised from entering into agreements that the CMA considers to be beneficial and not anticompetitive. The Order replaces the retained Vertical Agreements Block Exemption Regulation.

The draft explanatory memorandum includes an explanation of the draft legislation. The CMA will publish guidance to accompany the Order.

The deadline for responses to the consultation is 16 March 2022. To read the CMA’s press release in full and for a link to the consultation, click here.