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Vertical agreements are prohibited by section 2(1) of the Competition Act 1998 (CA 98) where they:

1. •

   may affect trade within the UK, and

2. •

   have as their object or effect the prevention, restriction or distortion of competition within the UK.

(the Chapter I Prohibition). It is also a requirement, under section 2(3) CA 98, that the agreement is implemented, or is intended to be implemented, in the UK.

Agreements that restrain competition may be exempted from the Chapter I Prohibition by:

1. •

   an individual exemption, where they satisfy the four requirements of section 9(1) CA 98 (see further, Chapter I prohibition and Introduction to the application of Chapter I to vertical agreements), or

2. •

   a block exemption order made under section 6 CA 98 by the Secretary of State, in relation to particular categories of agreements (based on an assessment that the block exempted restrictive agreements fulfil the four requirements of section 9(1) CA 98).

Each block exemption order creates a safe harbour, protecting those restrictive arrangements that satisfy its