Earlier this year Walpole led the luxury sector’s response to the consultation held by the UK Competition and Markets Authority’s (CMA) as part of its review of the Vertical Block Exemption Regulation (VBER), which covers Selective Distribution agreements, and which expires in the UK in May 2022. For readers not familiar with the Selective Distribution - it is a central pillar of the luxury goods business model and refers to the carefully selected and managed network of partners and distributors through which brands are able to distribute their products to maintain and enhance the luxury retail experience for the customer and, importantly, preserve the aura of luxury.
By nature of our business model and the levels of experience and service expected by our customers, this was a critically important consultation for the luxury sector here in the UK, post Brexit.
By working with our members across the UK and with our European colleagues, we created a dedicated working group to develop a representative position to highlight the priorities for our sector through the consultation and the necessary framework to enable future growth. During a luxury sector roundtable with the CMA team leading the consultation and through our written response we provided first hand examples and evidence from across our member businesses, as well as insights into our customers’ expectations. Additionally, given the leadership role our whole sector takes on sustainability, in particular the work that is taking place through our supply and distribution chains, we were also able to highlight the inclusion of sustainability focused criteria as well.
We are delighted to report back that the CMA published their recommendations to the Department for Business, Energy and Industrial Strategy (BEIS) last week and they support the current treatment of selective distributions and reflect a number of the points raised by Walpole and our members through the consultation process including additional protections for selective distribution systems such as:
• confirmation that the combination of exclusive and selective distribution in the same or different territories is permitted.
• the provision of greater protection for members of selective distribution systems against sales from outside the territory to unauthorised distributors inside that territory.
• no longer requiring that the criteria for online sales have to be overall equivalent to the criteria imposed in brick-and-mortar stores.
• further guidance to be provided on how environmental sustainability considerations can be included as criteria for selective distribution systems.
You can read Walpole partner Charles Russell Speechlys’ Summary of CMA recommendation to BEIS here.
Huge thanks to all Walpole members who took part in the various activities around the consultation, your input and case studies were crucial to being able to land our message with the CMA and subsequently Government and achieve this positive outcome for the whole sector.
For more information please email Carly von Speyr.
