On June 1, 2023, the Commission published revised Research & Development and Specialization Block Exemption Regulations (“R&D BER” and “Specialization BER”, together the “HBERs”)[1] , as well as revised Guidelines on Horizontal Cooperation (“Horizontal Guidelines”).[2] The new HBERs exempt certain agreements from the prohibition of Article 101(1) of the Treaty on the Functioning of the EU (“TFEU”), subject to specific conditions, and accordingly create a so-called “safe harbor” for certain forms of horizontal cooperation. Relatedly, the Horizontal Guidelines aim to guide undertakings in the interpretation and application of the revised HBERs, and thereby in their assessment of “various common types of horizontal cooperation agreements.”[3]
The revised HBERs were published following an extensive four-year review process that started back in 2019.[4] And while the Commission’s review found that the 2010 HBERs[5] and Horizontal Guidelines[6] enabled cooperation in an economically desirable way, it also demonstrated that there was still room for improvement.[7] The main objective of the new HBERs and Horizontal Guidelines is to address “the economic and societal developments of the last ten years,” notably the green and digital transition.[8]
The new HBERs will enter into force on July 1, 2023, and will supersede the 2010 HBERs, which are set to expire on June 30, 2023. This article highlights some of the key changes brought about by the revised package.
The revised HBERs
The Commission introduces a number of notable changes in the revised HBERs:
—Revocation powers. The revised HBERs now grant the Commission and national competition authorities the power to revoke the benefit of an individual exemption if its effects are incompatible with Article 101(3) TFEU.[9]
—Revised method for calculation of market shares. The revised HBERs (R&D and Specialization) clarify the method for calculating market shares to benefit from an exception. While market shares are to be calculated in principle based on sales data of the preceding calendar year, an average of the three preceding calendar years should be considered if this is more representative of the parties’ actual market position.[10]
—Simplified grace period. The revised HBERs (R&D and Specialization) simplify the period during which the parties can continue to benefit from the safe harbor if their market shares exceed the exemption thresholds (i.e., the “grace period”). This is now two consecutive calendar years following the year in which the relevant threshold was first exceeded.[11]
—Expansion of scope. The revised R&D BER clarifies that parties to an R&D agreement that do not compete on markets for existing products or technologies may nonetheless be competitors in innovation.[12] This change seeks to protect innovation competition in cases where it may not be possible to apply the regulation’s market share thresholds.[13] Under the revised Specialization BER, unilateral specialization agreements concluded among more than two parties can now benefit from an exemption.[14] Unilateral specialization agreements were previously defined only by reference to two parties.[15] This change will likely be of special interest to SMEs which—due to their limited size and resources—may often require more than two parties for an effective specialization agreement.[16]
The Horizontal Guidelines
The Horizontal Guidelines are designed to guide businesses in the assessment of their horizontal forms of cooperation. The revised text sought to provide “clearer and up-to date guidance”, including by adding references to the latest case law and additional practical examples.[17] This is reflected in the length of the revised guidelines, which now span more than 150 pages, and has doubled in size compared to the previous version.
The revised Horizontal Guidelines increase legal certainty through important clarifications on existing guidelines and the introduction of new guidance on fast-growing areas.[18] For example, the expanded guidance includes an updated chapter on information exchange, which provides for a new assessment structure of information exchanges between horizontal competitors[19] and addresses recent case law and digital developments.[20]
Another noteworthy change is the introduction of a new chapter on sustainability agreements.[21] This chapter addresses the most common forms of sustainability agreements and outlines those that likely fall outside the scope of Article 101(1) TFEU.[22] It also explains how agreements falling under the scope of Article 101(1) TFEU could benefit from an Article 101(3) TFEU exception,[23] underlining that a mere reference to a sustainability objective is insufficient to escape the prohibition.[24]
In addition to introducing a new chapter, the revised guidelines supplement previously existing sections. Notably, the chapter on commercialisation agreements now clarifies the rules pertaining to bidding consortia (i.e., cooperation between undertakings to submit a joint bid in a procurement competition)[25] and introduces—in light of the EU digital transformation—guidance on sharing agreements for mobile telecommunications infrastructure.[26]
Conclusion
The long-awaited revised HBERs and Horizontal Guidelines show that the Commission has sought to provide undertakings with clear and updated tools that can effectively serve as a guide when navigating the complex waters of the application of Article 101 TFEU to the various forms of horizontal cooperation.
Any horizontal cooperation agreements concluded on or after the entry into force of the HBERs on July 1, 2023, must be assessed against these new rules.[27] A transitional period until June 30, 2025, is foreseen for horizontal agreements concluded before July 1, 2023 which fall within the remit of the 2010 HBERs.[28]
[1] Commission Regulation 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, OJ 2023 L 143/9 (“the revised R&D BER”); Commission Regulation on the application of Article 101(3) of the Treaty on the Functioning of the European Union to certain categories of specialization agreements, OJ 2023, L 143/20 (“the revised Specialization BER”).
[2] Guidelines on the applicability of Article 101 of the Treaty on the Functioning of the European Union to horizontal cooperation agreements, pending publication in the Official Journal.
[3] European Commission, Explanatory note on the main changes proposed for the horizontal block exemption regulations and horizontal guidelines, para. 3, available at: Explanatory note on the revised HBERs and Horizontal Guidelines.
[4] European Commission, EU Competition rules on horizontal agreements between companies – evaluation, available on the Commission’s Have your say portal.
[5] Commission Regulation 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, OJ 2010 L 335/36 (“the 2010 R&D BER”); Commission Regulation on the application of Article 101(3) of the Treaty on the Functioning of the European Union to certain categories of specialization agreements, OJ 2010 L 335/43 (“the 2010 Specialization BER”).
[6] Guidelines on the applicability of Article 101 of the Treaty on the Functioning of the European Union to horizontal co-operation agreements, OJ 2011 C 11/1.
[7] Explanatory note on the revised HBERs and Horizontal Guidelines, paras 5-6.
[8] Ibid., para. 6.
[9] Revised R&D BER, Art. 10-11; Revised Specialization BER, Art. 6-7.
[10] Revised R&D BER, Art. 7; Revised Specialization BER, Art. 4; see also 2010 R&D BER, Art. 7(a)-(c); 2010 Specialization BER, Art. 5(a)-(c).
[11] Revised R&D BER, Art. 6(5); Revised Specialization BER, Art. 4(d). (Previously, the length of the grace period depended on the increase in market share. See 2010 R&D BER, Art. 7(d)-(e); 2010 Specialization BER, Art. 5(d)-(e).)
[12] Revised R&D BER, recital 16; Horizontal Guidelines, para. 99; Explanatory note on the revised HBERs and Horizontal Guidelines, para. 9.
[13] Explanatory note on the revised HBERs and Horizontal Guidelines, para. 9.
[14] Revised Specialization BER, Art. 1(1)(1)(a).
[15] 2010 Specialization BER, supra, Art. 1(1)(b).
[16] Explanatory note on the revised HBERs and Horizontal Guidelines, para. 12.
[17] Commission Press Release IP/23/2990, “Antitrust: Commission adopts new Horizontal Block Exemption Regulations and Horizontal Guidelines,” June 1, 2023.
[18] Explanatory note on the revised HBERs and Horizontal Guidelines, supra, para. 274.
[19] Ibid., para. 434.
[20] Ibid., for example, paras. 367-368.
[21] Revised Horizontal Guidelines, chapter 9.
[22] Ibid., section 9.2.
[23] Ibid., section 9.4.
[24] Ibid., para. 521.
[25] Ibid., section 5.4.
[26] Defined as “[a]greements where mobile telecommunications network operators share parts of their network infrastructure, operating costs, and the cost of subsequent upgrades and maintenance.” See Revised Horizontal Guidelines, supra, para. 258.
[27] Commission Press Release IP/23/2990, “Antitrust: Commission adopts new Horizontal Block Exemption Regulations and Horizontal Guidelines,” June 1, 2023.
[28] Revised Specialisation BER, Art. 8 and Revised R&D BER, Art. 12.