For any company looking to sell its products within the European Union’s vast single market—whether it’s a technology firm from the United States or a manufacturing powerhouse from Indonesia—understanding EU competition law is non-negotiable. At the heart of this legal framework is a critical piece of legislation governing the relationship between suppliers and distributors: the Vertical Block Exemption Regulation (VBER). As of 2025, this regulation, specifically Commission Regulation (EU) 2022/720, serves as the essential rulebook that determines whether a company’s supply and distribution agreements are legally compliant. It is a “safe harbour” that provides legal certainty, but navigating its conditions, especially its strict list of forbidden clauses, is crucial to avoid severe financial penalties.
## The Legal Foundation: Article 101 and the Purpose of the VBER
The starting point for all EU competition law is Article 101 of the Treaty on the Functioning of the European Union (TFEU). This article broadly prohibits any agreements between companies that have as their object or effect the prevention, restriction, or distortion of competition within the single market. While this is primarily aimed at cartels between competitors (horizontal agreements), it also applies to vertical agreements—that is, agreements between companies operating at different levels of the production or distribution chain, such as a manufacturer and its wholesaler, or a franchisor and its franchisee.