The European Union (EU) vertical agreement refers to the legal framework governing the relationship between suppliers and buyers within a specific market. This agreement outlines the terms and conditions under which businesses within the EU can engage in commercial transactions.

The vertical agreements are entered into between businesses operating at different levels of the supply chain. These could be manufacturers, wholesalers, or retailers. The agreements govern the terms of sale, purchase, and distribution of goods and services.

The EU views vertical agreements as beneficial to competition, as they can enhance efficiency and promote innovation. However, there are also concerns that the agreements can be used to create anti-competitive behavior, such as price-fixing or market division.

To ensure that vertical agreements remain beneficial to the market and do not harm competition, the EU Commission has implemented regulations that businesses must follow when entering into such agreements. These regulations aim to prevent anti-competitive behavior while encouraging fair competition and innovation.

One key aspect of the EU vertical agreement is that it must not contain any clauses that restrict competition, such as exclusivity clauses or minimum resale price maintenance. These clauses can limit the ability of other businesses to enter the market or compete on price.

Another important aspect of the EU vertical agreement is that it must not contain any clauses that restrict the ability of buyers to sell the products of competing suppliers. This is known as the „non-compete” clause, and its inclusion in a vertical agreement can hinder competition and stifle innovation.

When businesses enter into vertical agreements, they must demonstrate that the agreement does not harm competition within the market and that it is necessary to achieve certain benefits, such as enhancing efficiency or improving quality.

In summary, the EU vertical agreement provides a legal framework for businesses to engage in commercial transactions while promoting fair competition and innovation. However, businesses must ensure that their agreements comply with the regulations to avoid anti-competitive behavior.