Reform of competition rules for horizontal agreements
On 27 April 2000, the Commission published draft rules and guidelines on horizontal co-operation agreements between competitors, that is agreements between companies operating at the same level of the market. This marked the start of the public consultation on the proposed reform of competition rules in the field of horizontal agreements. The objective of these proposed Regulations and Guidelines is to clarify the application of competition rules in this area and to modernise the current rules. Once the consultation process is over, the Commission will adopt a final version of the Regulations and Guidelines. It is envisaged that these revised competition rules would enter into force in 2001.
The starting point for reform is that horizontal co-operation agreements are potentially distortive of competition and are liable to fall under the Community competition rules (Article 81 of the Treaty). Guidance for the assessment of such agreements is currently given by way of two block exemption Regulations (on research and development (R&D) agreements and specialisation agreements respectively) 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 need to be updated, the Commission has presented the following proposals: (i) a draft block exemption Regulation on the application of Article 81(3) of the Treaty to categories of specialisation agreements; (ii) a draft block exemption Regulation on the application of Article 81(3) of the Treaty to categories of research and development (R&D) agreements; (iii) draft Guidelines on the applicability of Article 81 to horizontal co-operation agreements.
The new proposals are presented as more effective and as reducing the regulatory burden for companies, while ensuring an effective control of agreements between companies holding significant market power. 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 proposals aim to give better guidance to market participants, by replacing the rather fragmented and partly outdated notices and Regulations in this area. The general approach taken by the Commission is similar to that adopted for the new Vertical Restraints Regulation of 22 December 1999.
The draft block exemption Regulations are intended to replace the existing Regulations on Specialisation (No. 417/85) and R&D (No. 418/85). In comparison to the existing Regulations the drafts are designed to be more user-friendly, with greater clarity and an increased scope of application. For companies holding no significant market power, the new block exemptions will 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 to such agreements. However, “hardcore” restrictions (price-fixing, output limitation or allocation of markets or customers) will generally remain prohibited. The market share threshold for exemption is set at 20% for specialisation agreements, and at 25% for R&D agreements.
The draft Guidelines complement the draft 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 collaborations (e.g. joint purchasing, or 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 should help companies to assess with greater certainty whether or not an agreement is restrictive of competition and, if so, whether it would qualify for an individual exemption.
The Commission approved the draft proposals on 18 January. As foreseen by the enabling Council Regulation, they were discussed with the Advisory Committee on Restrictive Practices and Dominant Positions on 22-23 February, prior to being published as draft legislative texts. The deadline for interested parties to submit comments on the new draft rules is 29 May. (IP/00/411, OJ C118, 27/4/00)
