International Commercial Law Blog

Commission adopts revised competition rules on horizontal co-operation agreements

The European Commission has revised its rules for the assessment of co-operation agreements between competitors, so called horizontal co-operation agreements. As it is often vital for companies to work together to achieve synergies, there exist a vast number of horizontal co-operation agreements in many industries.

“Horizontal co-operation agreements” are agreements concluded between competitors (as opposed to vertical agreements which are between companies at different levels in the supply chain), for example with a view to co-operate on research and development, production, purchasing, commercialisation, standardisation, or exchange of information. Horizontal co-operation can be pro-competitive and lead to substantial economic benefits, allowing companies to respond to increasing competitive pressures and a changing market place driven by globalisation. However, where the parties have market power, horizontal co-operation can also lead to serious competition problems.

The texts update and further clarify the application of competition rules in this area so that companies can better assess whether their co-operation agreements are in line with those rules. Modifications concern mainly the areas of standardisation, information exchange, and research and development (R&D).

Today the Commission has adopted a revised set of Guidelines and two Regulations which describe how competitors can co-operate without infringing EU competition rules. The “Horizontal Guidelines” provide a framework for the analysis of the most common forms of horizontal co-operation such as agreements in the areas of R&D, production, purchasing, commercialisation, standardisation, standard terms, and information exchange.

The two Regulations exempt from the competition rules certain R&D, specialisation and production agreements that are unlikely to raise competition concerns. Two key features of the reform are a new chapter on information exchange in the Horizontal Guidelines and a substantial revision of the chapter on standardisation agreements.

The Guidelines promote a standard-setting system that is open and transparent and thereby increases the transparency of licensing costs for intellectual property rights used in standards. The revised standardisation chapter sets out the criteria under which the Commission will not take issue with a standard-setting agreement (“safe harbour”). Moreover, the chapter gives detailed guidance on standardisation agreements that do not fulfil the safe harbour criteria, to allow companies to assess whether they are in line with EU competition law.

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