On November 6, 2019, the Commission published a public consultation seeking input on the amendment of the Horizontal Block Exemption Regulations (“Horizontal BERs”), which are set to expire on December 31, 2022, and of the Horizontal Guidelines.[1] Interested parties were given until February 12, 2020 to comment on the reform of these important instruments. The consultation is part of a wider Commission evaluation to determine whether the rules should be updated to better reflect the current economy and provide clearer guidance.

In the EU, agreements between undertakings that restrict competition are prohibited under Article 101(1) of the Treaty on the Functioning of the European Union (“TFEU”), unless exempted under Article 101(3) on the grounds that they generate economic benefits that outweigh negative effects.[2] The two Horizontal BERs block-exempt certain categories of horizontal agreements (among competitors or potential competitors) from the Article 101(1) prohibition on the grounds that they tend to generate such economic benefits. The Horizontal BERs’ purpose is to allow businesses to engage in economically desirable cooperation with greater legal certainty.

The regulations apply to research & development agreements[3] and to specialization agreements[4] respectively. The Commission has provided further guidance on the interpretation of the Horizontal BERs in its Horizontal Guidelines,[5] which also cover other types of cooperation, notably information exchange, as well as production, purchasing and commercialization agreements. The Horizontal BERs were last updated in 2010, with further direction on standardization and information exchange.

The Commission, depending on the outcome of its evaluation, may decide to allow the Horizontal BERs to lapse in 2022, extend them, or revise them. Though the Commission has stressed that it does not yet know of the impending changes, it considers that updates may be necessary to reflect (i) the digitization of the economy; (ii) the strength of online platforms; (iii) the growing threat of climate change; and (iv) the perceived need for more R&D cooperation. The feedback provided by thirteen parties in response to the Commission’s Roadmap, which set out its plans for the evaluation, gives a further indication of the issues that are likely to surface during the review. Respondents highlighted the following as areas in need of particular attention (i) information exchange and data pools; (ii) standardization and SEP licensing; (iii) joint purchasing; and (iv) sustainability.[6]

Interested parties seeking to contribute to the consultation should be aware that the Commission is looking for evidence-based submissions, providing qualitative and quantitative information, and concrete examples where possible. Replies will ultimately be published online alongside a summary of the submissions received. Though submissions can be anonymized, there is no procedure to apply for confidentiality. Documents can be attached, which will also be made public.

The Commission’s evaluation phase (considering the current rules and their functioning) will also include a support study, consultations with national competition authorities, and possibly a stakeholder workshop. The results will be published in a report in Q1, 2021, and will be followed by a forward-looking impact assessment, to evaluate proposed reforms, before the ultimate adoption of recommended measures.

[1]      See https://ec.europa.eu/info/law/better-regulation/initiatives/ares-2019-4715393/public-consultation_en.

[2]      Such agreements must improve the production or distribution of goods or services, or promote technical or economic progress, while allowing consumers a fair share of the resulting benefits.

[3]      Commission Regulation (EU) No. 1217/2010 of 14 December 2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to certain categories of research and development agreements (the “R&D BER”).

[4]      Commission Regulation (EU) No. 1218/2010 of 14 December 2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to certain categories of specialisation agreements (the “Specialisation BER”).

[5]      Communication from the Commission—Guidelines on the applicability of Article 101 of the Treaty on the Functioning of the European Union to horizontal co-operation agreements (the “Horizontal Guidelines”).

[6]      See https://ec.europa.eu/info/law/better-regulation/initiatives/ares-2019-4715393/feedback_en?size=10&p_id=5763121.