On June 1, 2023, the European Commission published its new block exemption regulations on research and development agreements (R&D BER) and specialization agreements (Specialization BER), together referred to as the Horizontal Block Exemption Regulations (HBERs). At the same time, it published its final Guidelines for Horizontal Cooperation Agreements (Horizontal Guidelines). The new HBERs will enter into force on July 1, 2023.
The HBERs establish a “safe harbor” that exempts certain R&D (see here) and specialization (see here) agreements from the application of EU antitrust rules. The new rules and related Horizontal Guidelines (see here) are intended to offer improved, detailed guidance to assist companies in their self-assessment of their cooperation agreements, based on recent case law and the Commission’s enforcement practice. The Commission has included additional examples in the Guidelines to further illustrate when it thinks that certain conduct is or is not legitimate. For future cooperation projects, the new HBERs and Horizontal Guidelines should provide companies with more flexibility and clarity, for example, as they explore the possibilities of sustainability cooperation. For any cooperation that was already in place before July 1, 2023, the HBERs foresee a transitional period. In case such cooperation already fulfilled the requirements of the previous HBERs, companies have until June 30, 2025 to comply with the new rules.
The new HBERs and Horizontal Guidelines replace previous versions that were adopted in 2010 and 2011 respectively. Their publication follows an intensive evaluation exercise, and the new texts are based on drafts prepared by the Commission in March 2022 that have since been amended in line with additional comments received from stakeholders.
Below, we provide a brief overview of some of the main changes that have been incorporated in the new HBERs and the Horizontal Guidelines (see our previous alert for additional details).
I. HBERs
- Changes common to both the R&D and Specialization BERs: The new rules simplify both the transition period applicable when market shares exceed the "safe harbor threshold" and the procedure for calculating market share, in favor of companies involved in R&D and Specialization agreements.
- Changes to the R&D BER: The new text exempts R&D agreements concerning entirely new products, technologies and processes and protects competition in innovation. One notable change from the draft text is that the Commission has dropped its proposal only to exempt R&D agreements if there are at least three competing R&D efforts in addition to and comparable to those of the parties to the R&D agreement. Therefore, regardless of whether companies engage in competition within established product or technology markets, they can still benefit from the safe harbor of the R&D BER.
- Changes to the Specialization BER: The Specialization BER covers cooperation agreements in the area of production, including unilateral specialization agreements, reciprocal specialization agreements and joint production agreements. The new rules expand the scope of the Specialization BER to explicitly include unilateral specialization agreements entered into by more than two parties.
II. Horizontal guidelines
- R&D agreements and production agreements: The new Horizontal Guidelines include sections explaining the application of the two HBERs to help companies better understand the way the HBERs work and the concepts and definitions on which they are based. In addition, the chapter on production agreements now includes specific guidance on mobile infrastructure sharing agreements.
- Joint Purchasing Agreements: The new Horizontal Guidelines clarify that the analysis regarding joint purchasing applies to all types of economic sectors; and not only to actual joint purchases but also to joint negotiations (including by licensees of a standard essential patent (SEP) license). The updated chapter additionally clarifies the distinction between joint purchasing arrangements and buyer cartels, and discusses retail alliances.
- Commercialization agreements: This chapter now includes a specific section on bidding consortia and provides more guidance on differentiating bid rigging from legitimate bidding practices.
- Information exchange: The chapter on information exchange has been restructured and expanded. It now incorporates recent case law and enforcement experiences since the draft guidelines were published, clarifies concepts such as “commercially sensitive information” and “potential procompetitive effects of data pools” and offers additional guidance on unilateral disclosure and indirect information exchanges (including hub-and-spoke scenarios).
- Standardization agreements: The new rules introduce more flexibility in the effects analysis by allowing a more limited participation in the standard-setting process, and a requirement of more specific disclosure by participants of their intellectual property rights that might be essential for the implementation of the standard under development. The chapter also states that standard development agreements disclosing a maximum accumulated royalty rate by all IP holders should not, in principle, restrict competition.
- New chapter on sustainability agreements: Reflecting the objectives of the European Green deal, the new Horizontal Guidelines include a chapter focused on assessing horizontal agreements pursuing sustainability objectives. Special attention is given to sustainability standardization agreements, expected to be the most common form of cooperation in this regard. In short, if a sustainability agreement affects the parameters of competition (e.g., price, quantity, quality, choice or innovation) there are now criteria for assessing whether the agreement qualifies for the “soft safe harbor.” If it does not, the agreement will have to be assessed in more depth to see if efficiencies outweigh the restrictive effects of the agreement. The guidelines describe three types of benefit that can be considered in that regard: individual use value benefits, individual non-use value benefits and collective benefits.
