On June 1, 2023, the European Commission (EC) adopted the revised Research & Development Block Exemption Regulation (R&D BER) and Specialization Block Exemption Regulation (Specialization BER) (collectively HBERs), alongside the revised Guidelines on the applicability of Article 101 of the Treaty on the Functioning of the European Union to cooperation agreements between competitors (Horizontal Guidelines) and a Q&A document on the adoption of the new rules.
HBERs provide a “safe harbor” from the application of EU antitrust rules. They apply to defined categories of R&D and specialization agreements that fulfill certain conditions set out in the HBERs. The updated HBERs will enter into force on July 1, 2023.
The Horizontal Guidelines provide detailed guidance to help companies assess whether their agreements may benefit from the safe harbor and on how to “self-assess” compliance with EU antitrust rules for R&D and specialization agreements that fall outside the safe harbor. In addition, they provide guidance on how to assess compliance with EU antitrust rules for various other types of cooperation agreements between competitors.
The new HBERs and the Horizontal Guidelines replace their 2011 predecessors (see 2011 R&D BER; 2011 Specialisation BER; 2011 Horizontal Guidelines). The new rules seek to (i) increase clarity, (ii) reflect new case law, and (iii) support the green and digital transitions by making it easier for businesses to cooperate in economically desirable ways.
What are the key changes?
The new R&D BER, which sets out the conditions under which agreements related to joint R&D and exploitation of any technology resulting from that R&D may benefit from the safe harbor, aims to (i) enable the block exemption to be more readily applied by small and medium-size enterprises and (ii) provide greater clarity and flexibility when calculating the market share threshold. It also increases the focus on protecting “innovation” competition — that is, where companies may not be competitors on existing product or technology markets but nevertheless push one another to innovate to compete for new markets. Interestingly, the EC dropped its initial proposal to exempt R&D agreements where fewer than three competing R&D efforts would remain, in addition to and comparable with those of the parties to the agreement.
Another notable change is the simplification of the grace period (i.e., the period during which an R&D agreement continues to benefit from the safe harbor even where the conditions for its application no longer apply because the parties’ market shares have increased beyond the applicable threshold) .
Both HBERs now give the EC and national competition authorities the power to withdraw the benefit of the exemption in individual problematic cases, for instance, where an R&D agreement would restrict innovation competition.
The new Specialization BER, which sets out the conditions under which agreements related to subcontracting activities between competitors may benefit from the safe harbor, also introduces changes to the “grace period” and market share calculation. In addition, the EC has expanded the scope of the safe harbor to cover agreements among more than two competitors.
Information exchange. The chapter on information exchange between competitors has been fully revised to reflect case law and enforcement developments. This includes new guidance on the exchange of digital content and data; indirect information exchange via an online platform or facilitated by an algorithm; data-sharing arrangements, including data pools; and data exchange in mergers and acquisitions. The Horizontal Guidelines also introduce practical measures that companies can take to avoid antitrust infringements, including the use of clean teams or independent trustees in addition to public distancing.
Sustainability agreements. A new chapter covers sustainability agreements, that is, agreements genuinely pursuing (broadly defined) sustainability objectives. Most importantly, the new chapter provides guidance on:
- sustainability agreements that are unlikely to raise competition concerns, for example, agreements relating to internal corporate conduct;
- the assessment of sustainability agreements under EU antitrust rules, including how to assess relevant consumer benefits (note that in addition to individual consumer benefits, collective benefits can also be taken into consideration provided that certain conditions are fulfilled); and
- the introduction of a “soft safe harbor,” subject to six cumulative conditions, for agreements between competitors to adopt new industry standards to meet sustainability objectives.
Joint purchasing. The Horizontal Guidelines provide additional guidance on when joint purchasing activities may infringe EU antitrust rules.
Other important changes include (i) the introduction of a section regarding mobile telecommunications infrastructure sharing agreements and (ii) an update to provide more guidance on practices such as bidding consortia and when cooperation may result in unlawful bid rigging.
What are the main implications for businesses?
The revisions to the Horizontal Guidelines and the HBERs are wide ranging and in many respects provide clearer, more extensive, and more “user-friendly” guidance to companies on when cooperations with competitors may raise antitrust concerns and how to ensure that such cooperation agreements do not infringe EU antitrust rules. The additional practical examples included in the Horizontal Guidelines will certainly help companies with that assessment.
Additionally, the chapter on sustainability agreements provides opportunities for new types of collaboration between competitors that pursue economic, environmental, or social goals. The EC has moreover reiterated its invitation to companies to seek informal guidance from the EC regarding novel questions, including on specific types of sustainability collaborations.
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