Vertical Restraints in the EU: Economics Has Updated, Law Hasn’t Installed the Patch
Online commerce has transformed how firms design their distribution systems, yet EU competition law continues to treat many online-sales restrictions as suspect by default. This tension lies at the heart of today’s vertical restraints debate. While the economic theory of vertical agreements has been largely settled for decades, the legal framework has not fully absorbed those insights in Europe. The result is a mismatch between how economists understand the effects of vertical restraints and how EU law still classifies them in practice.
This post summarizes and develops the core argument of my thesis: the EU’s treatment of online-sales restrictions remains excessively formalistic, shaped by the historical objective of market integration, rather than by modern economic reasoning. The recent shift toward a more-economics approach—visible in the 2022 reforms to the EU’s Vertical Block Exemption Regulation (VBER) and in the Coty judgment—is welcome but incomplete. A more coherent alignment would require rethinking hardcore restrictions, reconsidering the active and passive sales distinction, and adopting a rebuttable presumption model for by-object infringements.
Truth on the Market readers often debate the friction between legal tradition and economic analysis. Vertical restraints, especially online-sales restrictions, provide an unusually clear example of how that friction persists, how it distorts enforcement, and how it could be resolved.