Draft revised rules on horizontal cooperation agreements

The EC has published its revised block exemption regulations (BER) on R&D cooperation agreements and specialisation agreements together with the updated guidelines for horizontal cooperation agreements. Stakeholders have until 26 April 2022 to comment on these drafts. The final revised rules are expected to enter into force in January 2023.

Apart from streamlining and updating the current BERs, the Commission has updated and expanded the guidance on the types of cooperation discussed in the current guidelines (such as standardisation or joint purchasing) and has added new guidance on a number of additional types of cooperation that are not addressed in the current guidelines.

We have set out below some of the main changes set out in the draft rules.

R&D agreements: at least three comparable competing R&D efforts must exist when parties compete in innovation

The main change to the R&D BER rules is that they clarify under what conditions the exemption is available for R&D cooperation on entirely new products, technologies and processes. The application of a market share threshold was indeed difficult, if not impossible, when the cooperation involved products or technologies for which there was not yet an established market for which market shares could be calculated. This conundrum has now been solved. Under the proposed new rules, R&D cooperation on new products, technologies, processes specifically and more generally, R&D efforts directed towards a specific objective but not yet specific in terms of future products or technologies, are exempted if there are at least three comparable competing R&D efforts, in addition to the cooperation in question. This clarification or extension of the R&D block exemption brings more basic innovation within its scope and is a very welcome development.

Besides this important change, the revised R&D BER contains a number of clarifications and improved rule making, which should make it easier to determine whether the block exemption is applicable. For example, the proposed new rules provide for improved methods to determine whether the market share thresholds are met and prevent in particular an accidental loss of protection in case of fluctuating market shares.

Specialisation agreements: definition of unilateral specialisation agreements expanded to cover agreements with more than two parties 

The most important change to the Specialisation BER is to clarify the concept of a unilateral specialisation agreement. This term refers to agreements where one party agrees to cease production of certain products fully or partly and to purchase these from the other party/parties. Under the current Specialisation BER, unilateral specialisation agreements are defined as involving only two parties, yet the new provisions address this uncertainty and clarify that this term also covers agreements between more than two parties.  

Besides this important change, the revised Specialisation BER also contain several clarifications and adjustments aimed at facilitating its application, including a more flexible approach for the calculation of market shares in line with the proposed amendment to the R&D BER discussed above. The guidelines also extend the scope of the safe harbour to horizontal subcontracting agreements in general. Under the current rules the safe harbour only applies to such agreements ‘with a view to expanding production’.

Additional guidance for the digital and green transition 

The revised guidelines include, in particular, new guidance for additional forms of cooperation that are considered crucial for the digital and green transitions. Indeed, a stated goal is to provide relevant guidance for the digital and green transition. In particular, this concerns mobile infrastructure sharing agreements, data sharing in the form of data pools and sustainability agreements. As expected, the key focus among these three topics is on sustainability agreements, to which the Commission dedicates an entire new section.

The guidance for the other types of cooperation has witnessed a facelift. The proposed amendments primarily aim at streamlining the existing guidance and clarifying uncertainties in relation to the applicability of the rules to certain variations of cooperation agreements, with the aim to facilitate the self-assessment. In particular, more guidance is provided to identify the dividing line between object and effect restrictions and more generally between a permissible cooperation and prohibited cartels when looking for example at joint purchasing, bidding consortia and information sharing. 

Next steps

The revised horizontal rules cover a lot of ground. Linklaters will share further thoughts on these proposals in the weeks to come by responding to the EC’s consultation as well as publishing thought pieces on selected topics.