Currently, the UK has retained EU rules that exempt businesses from competition law in certain circumstances. The rules expire in May.

But expert advice from the UK’s Competition and Markets Authority recommends a new, bespoke competition law exemption for the UK, which will replace the retained EU rules.

The new rules ensure competition law does not impose unnecessary burdens, encouraging so-called ‘vertical agreements’  – deals between companies at various levels of the supply chain, such as grocers.

These vertical agreements benefit consumers by encouraging efficiencies, investment and innovation. Benefits of the new UK system include:

• Removing wide retail parity obligations from the exemptions. These obligations specify that a product or service may not be offered on better terms on any other indirect sales channels, including through  other distributors or online platforms. For example, currently a travel agent might require a hotel not to offer its rooms on any other sales channel at a better price or on better terms and conditions, limiting the incentives for travel agents to compete
• Creating a more level playing field for high streets and retailers by expanding the exemptions to cover agreements that treat online and offline sales differently. For example, charging the same distributor a higher price for products intended to be resold online than for products intended to be sold offline
• More chances for businesses to design their distribution systems. For example, by allowing a business to combine distribution rights by allowing multiple retailers of its product in one area while having an exclusive arrangement with another retailer elsewhere

The government is consulting on the legal wording of the exemption. The Competition and Markets Authority will publish further guidance to accompany this legislation soon.