Vertical Agreement
An agreement between businesses operating at different levels of the same supply chain — such as a manufacturer and a distributor — concerning the terms on which they buy, sell or resell goods or services; a defined category that can benefit from a block exemption from UK competition law.
Independent editorial summary — not the official statute text. Read the official version on legislation.gov.uk.
Competition law treats agreements between competitors (horizontal agreements) more suspiciously than agreements up and down a supply chain, because vertical arrangements are often pro-competitive — they help get goods to market efficiently. The Competition Act 1998 (Vertical Agreements Block Exemption) Order 2022 defines the category precisely: 'for the purposes of this Order vertical agreements are agreements or concerted practices entered into between two or more undertakings each of which operates, for the purposes of the agreement or the concerted practice concerned, at a different level of the production or distribution chain, and relating to the conditions under which the parties may purchase, sell, or resell certain goods or services.'
Because many vertical agreements pose little risk to competition, the 2022 Order — made under section 6 of the Competition Act 1998 — automatically exempts qualifying vertical agreements from the Chapter I prohibition against anti-competitive agreements, provided neither party's market share exceeds 30% and the agreement does not contain certain 'hardcore' restrictions (such as resale price maintenance). The CMA's accompanying guidance on the block exemption, published in July 2022, supersedes both the former European Commission guidelines on vertical restraints and the CMA's earlier domestic guidance on the subject.
Related terms
Official sources
This explanation is drawn from the official sources below; every substantive statement is verified against them. For advice on a specific matter, see our find help page.