Brussels, 29 November 2000
Commission reforms competition rules for CO-OPERATION between COMPANIES
The European Commission today adopted new competition rules concerning so-called horizontal co-operation agreements, i.e. co-operation agreements between competitors. They consist of revised block exemption Regulations on Research and Development agreements and Specialisation agreements and guidelines on various types of co-operation agreements. The new rules reform a key area of competition policy; they are part of a wider review undertaken by the Commission to streamline and adapt EC competition law. As co-operation between competitors becomes increasingly important in today's economy, clear rules are an important contribution to Europe's competitiveness.
Following adoption of the texts, Mario Monti, the Commissioner in charge of competition policy, stated: "This reform is another milestone in our efforts to modernise EC competition rules. A more efficient policy towards horizontal co-operation will reduce the regulatory burden for companies, while ensuring an effective control of agreements between companies holding market power. This will benefit consumers, companies and the Commission alike."
Horizontal co-operation agreements are potentially distortive of competition and are liable to fall under EC competition rules (Article 81 of the Treaty).
Guidance for the assessment of horizontal co-operation is currently provided by two 'block exemption' Regulations (on research and development (R&D) agreements and specialisation agreements) and two interpretative Notices (dealing with particular issues such as co-operative joint ventures). As the block exemption Regulations will expire on 31 December 2000, and as the existing Notices needed revision, the Commission, over the last three years, carried out a wide-ranging reflection on the future assessment of horizontal co-operation.
As a result, the Commission has today adopted
The new rules embody a shift from the formalistic regulatory approach underlying the current legislation towards a more economic approach in the assessment of horizontal co-operation agreements. The basic aim of this new approach is to allow competitor collaboration where it contributes to economic welfare without creating a risk for competition.
The new rules will enter into effect on 1 January 2001. Existing agreements will continue to be covered by the current block exemption Regulations until 30 June 2001.
The review of the competition rules applicable to horizontal co-operation agreements started in late 1997 with a wide-ranging consultation of European companies. It showed that industry regards the existing block exemption Regulations as too focused on legal clauses, and that there is a need for clearer guidance on the assessment of those categories of co-operation which are not covered by any block exemption.
The new documents thus give better guidance to market participants. They replace the fragmented and partly outdated notices and regulations in this area. The approach is very similar to that of the new Regulation setting out the rules for the distribution sector ("vertical co-operation agreements") which the Commission adopted on 22 December 1999.
The two block exemption Regulations adopted today replace the existing Regulations on Specialisation (Commission Regulation (EEC) No. 417/85) and R&D (Commission Regulation (EEC) No. 418/85). In comparison to the existing Regulations the new texts are designed to be more user-friendly, with greater clarity and an increased scope of application. The new block exemptions replace the existing system of specifically exempted 'white list' clauses by a general exemption of all conditions under which undertakings pursue R&D and specialisation agreements. This move away from a clause-based approach gives greater contractual freedom to the parties of such agreements and removes the "strait-jacket" imposed by the old Regulations. The market share threshold for exemption of all parties to an agreement combined is set at 20% for specialisation agreements, and at 25% for R&D agreements. Beyond these market shares, R&D or specialisation agreements will not automatically be prohibited but will have to be assessed individually. However, 'hardcore' restrictions (price-fixing, output limitation or allocation of markets or customers) will generally remain prohibited irrespective of the parties' market power.
The guidelines complement the block exemption Regulations. They are applicable to R&D and production agreements not covered by the block exemptions as well as to certain other types of competitor collaboration (e.g. joint purchasing, joint commercialisation). The guidelines describe the general approach which should be followed when assessing horizontal co-operation agreements and set out a common analytical framework. This helps companies to assess with greater certainty whether or not an agreement is restrictive of competition and, if so, whether it would qualify for an exemption.
A first draft of the new texts was approved by the Commission on 18 January. Since then they have been discussed with the Member States and interested third parties. On 20 & 21 June a public hearing took place which showed strong support expressed by European industry for this reform.
The two block exemption Regulations and the guidelines will be published in the Official Journal shortly. They will also be made available on the Competition DG's web site at: