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Juridiskie pakalpojumi


The EU’s revised Horizontal Guidelines and Block Exemption Regulations – Keeping pace with reality?

On 1 June 2023, the European Commission (hereinafter, the “Commission”) adopted the much-anticipated revised horizontal block exemption regulations (hereinafter, the “HBERs”) on research and development and specialisation agreements, including the revised guidelines on cooperation agreements (hereinafter, the “Guidelines”), replacing the guidelines and regulations from 2010.

The revised HBERs entered into force on 1 July 2023 and remain valid until 30 June 2035.  To simplify compliance, the HBERs provide for a transitional period of 2 years. Thus, agreements can remain block exempted even if these do not meet the new conditions, however, meet the conditions of the previous HBERs.  Nevertheless, it is advised to ensure such agreements comply with the revised conditions well before the end of the transitional period.

1. What triggered the revision of the existing rules?

Naturally, a lot has changed over the last 12 years. The Commission has thus attempted to align the revised HBERs and Guidelines with the European Courts’ case-law, the Commission’s decisional practice, as well as hardline policy initiatives (e.g., climate and digital transitions) and businesses’ needs in an ever-challenging economic cycle.

In sum, the Guidelines provide added guidance both in terms of clarifying/updating existing concepts (e.g., information exchanges) and in relation to issues not previously covered, such as network sharing agreements between mobile telecommunication operators and sustainability agreements. The Commission has also improved the structure of the Guidelines to make the document more “readable” and user-friendly, a move to address concerns that the 2010 texts were unclear and somewhat challenge to interpret.

2. What are the key changes?

A. Mobile Telecommunications Infrastructure Sharing Agreements

The Guidelines lay down new conditions under which mobile telecommunications operators (hereinafter, “MNOs”) may enter into network sharing agreements (hereinafter, “NSAs”). These cover agreements where operators share the use of parts of their network infrastructure (e.g., basic site infrastructure, Radio Access Network equipment or spectrum), operating costs and the cost of subsequent upgrades and maintenance.

Notably and in principle, the Commission recognises NSAs are not considered as by “object” restrictions “unless they serve as a tool to engage in a cartel”. NSAs, however, may have restrictive effects on competition, e.g., by reducing infrastructure competition and in turn, limiting competition in the wholesale and retail supply of mobile telecoms services. Therefore, NSAs are to be assessed on a case-by-case basis, each time taking into account several factors, such as the type and depth of sharing, the geographic scope and market coverage of the NSA and the market structure and characteristics.

The Commission also provides several minimum conditions operators must comply with to minimise the risk of anti-competitive effects. These include requiring operators to:

  • each control and manage their own core network;
  • maintain independent retail and wholesale operations;
  • maintain the ability to follow independent spectrum strategies;
  • refrain from exchanging commercially sensitive information beyond that which is strictly necessary for the mobile infrastructure sharing to function (potentially with barriers to information exchange in place).

Non-compliance of the mobile infrastructure sharing agreement with these minimum conditions gives an indication the mobile infrastructure sharing agreement is likely to have restrictive effects under Article 101(1) TFEU.

B.  Information Exchange  

The Guidelines provide the much-needed additional guidance on information exchanges relevant for parties’ self-assessment of cooperation agreements; specifically, the Guidelines provide for a better and clearer (in contrast to the previous rules) definition of what constitutes anti-competitive information exchanges.

Namely, the Guidelines address such notions as commercially sensitive information; explain the differences between aggregated and individualised information; detail the relevance of the age of information; address the unilateral disclosures and indirect information exchanges. The latter also delves into “hub-and-spoke” situations, which are not adequately covered under the existing case-law of the EU Courts, and exchanges via a third-party, which provide hope of legal certainty for such assessments from now on.

The Guidelines add clarification on those information exchanges that are held to be by “object” or “effect” restrictions, in accordance with the case-law of the EU Courts. There are also additional clarifications regarding the information exchanges concerning varying types of horizontal cooperation agreements (e.g., joint purchasing and production agreements).

The Guidelines now also provide guidance (although limited) concerning algorithms and information exchanges, the benefits, and potential concerns.

There is minimal guidance still, however, concerning information exchanges during acquisition processes and regulatory initiatives (i.e., sharing information with other undertakings as prescribed by law or by public authorities).

Finally, the Commission has outlined, to a limited extent, practical guidance to avoid the exchange of commercially sensitive information by using “clean teams” to implement horizontal cooperation agreements, as well as how to effectively undertake “publicly distancing” from the exchange of commercially sensitive information.

C.  Joint purchasing alliances 

As of recently, joint purchasing alliances (for instance, alliances between supermarkets) and buyer cartels have been the spotlight of both the Commission and national investigations.

By definition, “buyer cartels” (which are deemed illegal without the need to analyse any effects thereof) are agreements or concerted practices between two or more purchasers which, without engaging in joint negotiations vis-à-vis the supplier and coordinate the purchasers’ individual competitive behaviour in the purchasing market or the individual negotiations amongst suppliers and buyers, as well as where purchasers agree to exchange commercially sensitive information “outside any genuine joint purchasing arraignment that interacts with suppliers collectively, on behalf of its members”.

On the other hand, the joint negotiation of purchasing arrangements by buyers in genuine purchasing agreements, needs to be assessed on a case-by-case basis. Thus, the existence of actual or potential anticompetitive effects from such an arrangement should be established, in contrast to the above-described buyer cartels, which are presumed illegal.

D.  Bidding consortia

The Guidelines outline the definition of a “bidding consortia” and confirm that such arrangements must be distinguished from bid-rigging (or collusive tendering) concerning public or private procurement tenders, with practical examples.

The Commission acknowledges, for example, that the parties active in the same market may coordinate on the submission of a bid when in isolation, the parties would not be able to carry out the project individually, “due to the size of the project or its complexity”.

E.  Standardisation Agreements

The Guidelines also include guidance for parties to assess the compatibility of standardization agreements, with practical examples.  A couple of updates from the previous guidelines include:

  • the standard setting should be open and accessible by all;
  • restrictions are permitted, for example, if there is competition between several standards and standards development organisations (SDOs) or “if the restriction on the participants is limited in time and with a view to progressing quickly”.

The Commission has further included additional clarifications for parties carrying out assessments for licence fees under FRAND (which stands for fair, reasonable, and non-discriminatory) terms.

F.  Sustainability Agreements

The Guidelines now include an entire section on sustainability agreements in light of the active political push towards the inclusion of social objectives in competition rules.

In the Guidelines, “sustainability” is widely defined as encompassing activities that support economic, environmental and social development – “The notion of sustainability objectives therefore includes, but is not limited to, addressing climate change (for instance, through the reduction of greenhouse gas emissions), reducing pollution, limiting the use of natural resources, upholding human rights, ensuring a living income, fostering resilient infrastructure and innovation, reducing food waste, facilitating a shift to healthy and nutritious food, ensuring animal welfare, etc.”.

The Commission has provided examples as to when sustainability agreements now generally fall outside the scope of Article 101(1) TFEU (meaning such agreements are generally not considered caught by EU competition law):

  • agreements that aim solely to ensure compliance with sufficiently precise requirements or prohibitions in legally binding international treaties, agreements or conventions, whether or not they have been implemented in national law;
  • agreements that do not concern the economic activity of undertakings, but their internal corporate conduct;
  • agreements to set up a database containing general information about suppliers that have (un)sustainable value chains (for instance, suppliers that respect labour rights or pay living wages); use (un)sustainable production processes, or supply (un)sustainable inputs, or information about distributors that market products in a(n) (un)sustainable manner, but which do not forbid or oblige the parties to purchase from such suppliers or to sell to such distributors;
  • agreements between competitors relating to the organisation of industry-wide awareness campaigns, or campaigns raising customers’ awareness of the environmental impact or other negative externalities of their consumption, provided that they do not amount to joint advertising of specific products.

The Commission now also details a list of consumer “pass-on” benefits in the context of carrying out an assessment of compliant sustainability agreements (in accordance with second condition of Article 101(3) TFEU) i.e., “individual use value benefits”, “individual non-use value benefits” and “collective benefits”.

Finally, the Commission has included a so-called ‘safe harbour’ (meaning such agreements are not caught by the general prohibition of anticompetitive agreements under EU competition law) for setting sustainability standards in agreements if the following criteria are satisfied:

  •  there must be transparency and all interested competitors must be able to participate in the process;
  • must be voluntary participation by those involved;
  • can be a minimum standard. However, there must be freedom by those involved to apply a higher standard;
  • must be no exchange of commercially sensitive information between those involved;
  • must be effective and non-discriminatory access to all;
  • the sustainability standard must either:
    • not lead to a “significant” increase in price or “significant” reduction in quality of the products; or
    • the combined market share of the participants must not exceed 20% on any relevant market affected by the standard.

3. What should businesses do now?

In light of the above, companies must review and update their existing or planned horizontal cooperation agreements to ensure they fulfil the conditions for an exemption under the HBERs or Article 101(3) TFEU.

As outlined above, the rules provide for a transitional period of 2 years. However, we advise that a review of the existing contractual arrangements is undertaken on a timely basis since full compliance is expected precisely by 1 July 2025.

Should you have any questions or clarifications concerning the HBERs, or the Guidelines, or require practical assistance, please reach out to a member of the VILGERTS’ Competition team.

July 31, 2023 by Charles Clarke, Expert Counsel

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