On 6 May 2021, the European Commission (“Commission”) published the findings of its evaluation of the horizontal block exemption regulations for Research & Development (“R&D BER”) and specialisation agreements (“Specialisation BER”, together “HBERs”), as well as the accompanying Horizontal Guidelines (“Evaluation”).
The Commission launched the Evaluation in 2019 to assess the future relevance of the HBERs and the Horizontal Guidelines, since their adoption in 2011 and 2012. It gathered a variety of evidence on the functioning of the HBERs, which included:
- findings of an open public consultation running from November 2019 to February 2020;
- responses to the call for contributions on Competition Policy and the Green Deal launched in 2020; and
- an external evaluation support study, which cross checked the public consultation and the responses received with the Commission’s and national competition authorities’ own experiences.
According to the Commission, the results show that, while still relevant and useful to businesses, there is a need for the HBERs and Horizontal Guidelines to better reflect recent socio-economic developments like digitalisation and sustainability. The Evaluation also identified that businesses perceive some rules as unnecessarily strict and unclear.
Points of revision
A key finding of the Evaluation is that the HBERs need to accommodate sustainability objectives. In recent years, sustainability has increasingly come into focus of EU competition policy. As a result, the Commission is seeking to ensure that the rules governing horizontal agreements, amongst others, align with the sustainability goals of the European Green Deal. The revised HBERs will aim to clarify the scope of permissible “sustainability” cooperation between competitors.
Respondents also identified a number of issues concerning the conditions for exemption under the R&D BER. They highlighted that the current R&D BER may be too narrow to encompass all procompetitive R&D agreements, especially in its requirements for access to the results of joint R&D and pre-existing know-how. Another issue identified was that the R&D BER does not provide sufficient guidance as to the status of early stages of R&D (particularly basic research). Further, the Evaluation found that the 7-year exemption for commercial non-competes can be too short where R&D costs are too high to be recuperated within 7 years.
Similarly, some stakeholders stressed the need to expand the scope of the Specialisation BER (e.g. to include tolling agreements), and to clarify some of its narrow definitions in more detail. The Evaluation found a certain lack of clarity in the Specialisation BER concerning notions such as joint production and joint distribution. Respondents noted that the application of those definitions in the current Specialisation BER to certain types of specialisation agreements was difficult.
The Evaluation identified a number of other issues in potential need of revision. These issues generally concern the clarity of the rules and their ability to address new market developments:
- Although stakeholders confirmed that market share thresholds indicating safe harbours ease the assessment of agreements, they noted that calculating market shares and defining markets can be complex. Some added that current market thresholds are too low to exempt all appropriate agreements.
- Provisions concerning information exchange, production, commercialisation, and standardisation agreements are considered too strict and difficult to interpret by businesses.
- Omission of some more recent phenomena entails significant legal uncertainty for agreements that often involve large investments. In particular, the HBERs provide limited guidance on many new cooperation models that appeared because of digitalisation, and there is no dedicated chapter for data sharing and pooling or network sharing agreements.
The Commission concluded that a revision of the rules affecting horizontal cooperation is necessary to improve legal certainty, facilitate administrative supervision by the EU and the relevant national authorities and improve compliance. Even if business confirmed that the HBERs and Horizontal Guidelines are useful instruments and remain relevant for stakeholders, the Evaluation found that they require revisions for the digital age and to facilitate achievement of sustainability goals.
As a next step, the Commission will conduct an impact assessment on the policy options for the review. This impact assessment will involve a new public consultation, coming later this year, through which stakeholders will be able to provide feedback and put forward their own views. Stakeholders will also be able to comment on a draft of the revised rules that will be published at the beginning of 2022.
The revised rules will come into force after 31 December 2022, when the current rules are due to expire.