Block exemptions come into effect

Minister for Economic Services, Josef Bonnici, after consultation with the Commission for Fair Trading and following discussions with representatives of the Constituted Bodies, has issued a number of Block Exemptions Regulations applicable to certain categories of exclusive agreements.

These regulations, which have been published today in the Government Gazette, come into effect on 1st August 1996, and cater for four categories of exclusive agreements, that is exclusive distribution, exclusive purchasing, franchising and beer & beverages agreements.

Economic Services Minister Josef Bonnici hailed these regulations as yet another milestone towards a healthier business environment within a more competitive oriented market as envisaged in the Competition Act of 1994. He said "these regulations are necessary for the business community since they provide the effective legal tools with which the members of the business community are expected to operate, enhancing the competition principles advocated in the Competition Act."

The Block Exemptions regulations just published have been primarily modelled on the existing EU regulations. However, certain modifications have been effected with the intention to cater for the needs of the local market.

For example, in the case of the Block Exemption on the beer and beverages exclusive purchasing agreements, suppliers are only being allowed to enter into agreements with "on premises" establishments, excluding grocers and supermarkets. Suppliers of beers and beverages are not being allowed

to impose on the resellers the obligation to purchase more than one range of their products, allowing suppliers, who cannot offer the whole range of beverages to be in a better position to compete. Again, a reseller will be able to terminate an agreement if he is offered better terms by another supplier without having to incur any form of penalty other than the forfeiture of any benefits contemplated in the relative agreement; the supplier will not be able to impose on the reseller the minimum prices at which the reseller has to sell the products on which an agreement has been entered into, thus allowing the seller to pass on a percentage of the discount on to the consumer.

As from 1st August 1996, all new agreements under the categories of agreements so published, should be drafted according to the conditions and limitations contained in the relative block exemptions regulations, if they are to be exempted. Agreements so exempted need not be notified to the Office for Fair Competition.

To cater for all those agreements existing on the 31st July 1996,and being agreements which fall under the categories of agreements so specified in the Government Gazette, a fifth Block Exemption has been published. The purpose of this block exemption is to allow such agreements "a cleaning up period" to comply with the relative Block Exemptions regulations published today. The effective period of this fifth block exemption is six months, up till the end of January 1997. In the case of the other regulations, the effective period is up till the end of October 1999.