Antitrust: Commission adopts new Horizontal Block Exemption Regulations and Horizontal Guidelines

The European Commission has today adopted revised Horizontal Block Exemption Regulations on Research and Development (‘R&D’) and Specialisation agreements (‘HBERs‘), accompanied by revised Horizontal Guidelines, following a thorough evaluation and review of the current rules. The revised HBERs and Guidelines provide businesses with clearer and up-to-date guidance to help them assess the compatibility of their horizontal cooperation agreements with EU competition rules. The new HBERs will enter into force on 1 July 2023, while the Guidelines will do so following their publication in the Official Journal of the EU.

Main changes in the revised rules

The HBERs exempt R&D and specialisation agreements from the prohibition in Article 101(1) of the Treaty on the Functioning of the European Union (‘TFEU‘), subject to certain conditions. The rules thus provide for a safe harbour where certain agreements are block exempted from the competition rules.

The revised rules adopted today introduce the following changes:

  • Expand the scope of the Specialisation Block Exemption Regulation to cover more types of production agreements concluded by more than two parties. In addition, the revised rules introduce a more flexible approach for the calculation of the market shares for the purpose of applying the block exemption. They also include specific guidance on how to apply the latter.
  • Increase clarity and flexibility as regards the calculation of market shares for the purpose of applying the R&D Block Exemption Regulation and include guidance on how to apply it. In particular, the revised rules give more prominence to the protection of innovation competition, especially in cases where it is not possible to calculate market shares, and in this context emphasises the powers of the Commission and national competition authorities to withdraw the benefit of the exemption in individual problematic cases.
  • Update the Introductory Chapter of the Guidelines with the latest case law on key concepts such as concerted practices, potential competition, restrictions by object and by effect, and ancillary restraints. This chapter also contains new guidance on the application of Article 101 TFEU to agreements between joint ventures and their parent companies, as well as expanded guidance on how to apply the Guidelines to agreements that involve cooperation on more than one type of activity (e.g., production and commercialisation).
  • A new section on Mobile Telecommunications Infrastructure Sharing Agreements reflecting recent enforcement practice in the chapter of the Horizontal Guidelines on Production Agreements. This new guidance sets out factors relevant for the assessment of these agreements and includes a list of minimum conditions that companies must comply with to reduce the risk of infringing competition rules.
  • Expand and clarify the chapter of the Guidelines on Purchasing Agreements to reflect recent case practice. The revised chapter explains the distinction between joint purchasing and buyer cartels. It also clarifies that joint purchasing extends to arrangements whereby buyers negotiate purchase conditions jointly, but each buyer makes its purchases independently. It also gives more prominence to possible anti-competitive effects on the upstream supply side and provides guidance on certain joint negotiating tactics, including the use of temporary order stops.
  • Expand the chapter of the Guidelines on Commercialisation Agreements to include a new section on bidding consortia and guidance on the distinction with bid rigging.
  • Restructure and expand the chapter of the Guidelines on Information Exchange to reflect the latest case law and enforcement experience. The revised chapter includes additional guidance on: (i) the concept of commercially sensitive information; (ii) the types of information exchange that may constitute restrictions of competition by object; (iii) potential pro-competitive effects of data pools; (iv) indirect forms of information exchange, including hub-and-spoke arrangements; (v) anti-competitive signalling via public announcements; and (vi) practical measures that companies can take to avoid infringements, such as limiting the scope of the exchange, using clean teams or independent trustees and public distancing.
  • Amend the chapter of the Guidelines on Standardisation Agreements to offer greater flexibility regarding the requirement of open participation in the standard-setting process. The revised chapter also clarifies (i) that the disclosure by parties to a standardisation agreement of a maximum cumulated royalty rate is not anti-competitive; and (ii) the requirement for participants to disclose relevant intellectual property rights.
  • A new chapter to the Horizontal Guidelines covering Sustainability Agreements to clarify that the antitrust rules do not stand in the way of agreements between competitors that pursue a sustainability objective. The new guidance contains a broad definition of sustainability objectives, based on the UN Sustainable Development Goals, and it lists various examples of sustainability agreements that generally fall outside the scope of Article 101(1) TFEU. The new rules also provide a soft safe harbour for sustainability standardisation agreements that meet certain conditions. They also clarify how a sustainability agreement can be exempted by describing types of benefits that may be taken into account. The new chapter further contains hypothetical examples illustrating the application of Article 101 TFEU. The new sustainability chapter also reminds companies wishing to enter into a sustainability agreement that they can request informal guidance from the Commission in order to ensure compliance with EU competition rules. The provision of such guidance may complement the general framework of analysis set out in the new sustainability chapter.

Additional detailed information on the main changes can be found in an explanatory note which accompanies the revised rules.

Background on the review process

In May 2021, the Commission published a Staff Working Document setting out the results of its evaluation of the 2010 HBERs and the 2011 Horizontal Guidelines. The evaluation showed that these instruments are useful tools which significantly facilitate the self-assessment of horizontal agreements and help reduce compliance costs for businesses. However, the evaluation also indicated that the rules needed to be adapted to market and societal developments that have occurred since their adoption.

Following the evaluation, in June 2021 the Commission launched an impact assessment, during which it gathered further evidence on the areas for improvement, including through an open public consultation, stakeholder workshops, discussions with interested parties and national competition authorities, as well as through targeted expert reports.

In March 2022, the Commission launched a public consultation on draft revised HBERs and Horizontal Guidelines.The results of the public consultation are summarised in the Impact Assessment Report, which is also published today.This Report includes more details on the consultation activities as well as the assessment of the proposed changes.

Background on the HBERs

Article 101(1) TFEU prohibits agreements between companies that restrict competition. However, under Article 101(3) TFEU, such agreements are compatible with the single market, provided they contribute to improving the production or distribution of goods or to promoting technical or economic progress, while allowing consumers a fair share of the resulting benefits and without eliminating competition.

The HBERs exempt R&D and specialisation agreements that meet certain conditions from the prohibition in Article 101(1) TFEU, thus creating a safe harbour for those agreements. The HBERs are accompanied by the Horizontal Guidelines, which provide guidance on how to: (i) apply the HBERs; (ii) assess R&D and specialisation agreements that fall outside the safe harbour; and (iii) assess various other common types of cooperation agreements between competing companies. These include joint purchasing and joint commercialisation agreements, standardisation agreements, exchanges of information and sustainability agreements.

For More Information

See the dedicated webpage of DG Competition, which contains the stakeholder contributions submitted in the context of the evaluation and the impact assessment, summaries of the various consultation activities, the evaluation Staff Working Document, the expert reports prepared for the impact assessment and the Impact Assessment Report.

Do not miss the opportunity to listen to a debate about some of the key developments of the HBERs and Horizontal Guidelines during the second episode of the Let’s Talk Competition Webcast Series, which will take place on 26 June 2023 at 13:00 (CET). More information in the dedicated event website.

Questions and Answers on adoption of the new Horizontal Block Exemption Regulations and Horizontal Guidelines