Home Knowledge New EU Guidance on Co-operation Between Competitors

New EU Guidance on Co-operation Between Competitors

Claire Waterson, Cormac Little

Businesses considering engaging in research and development or other co-operative partnerships with competitors should consult comprehensive new EU guidance which came into force on 1 January 2011.

The guidance relates to “horizontal” co-operation agreements (i.e., co-operation between actual or potential competitors) and comprises two new Block Exemption Regulations (BER) plus revised European Commission guidelines (the New Guidelines). These update and replace Commission guidelines and BERs in place since 2001.

The BERs relate to research and development (R&D) and specialisation agreements.  While the structure of the new BERs mirrors that of the 2001 versions, there are a number of important changes. For example, the Commission has extended the scope of the R&D BER to include ‘paid-for research’ agreements, where one party finances R&D carried out by another. In addition, the new R&D BER gives parties more scope to exploit the R&D results on a joint basis.  The new BERS apply to agreements concluded from 1 January 2011 onwards; there is a two-year transitional period for agreements in place on that date that meet the conditions of the 2001 BERs.

The New Guidelines complement the new BERs and while they continue to cover the most common types of horizontal co-operation agreements – including those relating to R&D, production, purchasing and commercialisation – they contain considerably more detail than their predecessor. Among the more important changes are a new chapter covering information exchanges between competitors and a substantially expanded chapter on standardisation agreements.

The New Guidelines seek to clarify which information exchanges are likely to breach EU competition rules. Any exchange, including unilateral disclosure, of ‘strategic information’ is likely to do so as it reduces the independence of competitors’ conduct on the market and diminishes incentives to compete. Standardisation agreements seek to define technical/quality requirements with which current or future products, production processes, or services may comply. The Commission recognises both the positive economic effects of such agreements (such as the development of new and improved products) and the possible anti-competitive outcomes (e.g., where companies engage in anti-competitive discussions in the context of standard-setting). The New Guidelines identify features which will usually mean that the standardisation agreement in question is unlikely to be anti-competitive.

The expanded guidance is to be welcomed.  It should enable businesses to exploit the benefits of legitimate co-operation – even with their competitors – with greater certainty that this is compatible with EU competition rules, the penalties for breach of which can be severe.