Horizontal Cooperation Agreements – New EU Regulations and Guidelines

4 minute read | June.21.2023

On 1 June 2023, the European Commission has announced the adoption of updated Horizontal Block Exemption Regulations on Research and Development (R&D) and Specialization agreements (HBERs) and revised Horizontal Guidelines.

HBERs exclude certain horizontal agreements from the scope of Art. 101(1) TFEU, the cartel prohibition, based on the assumption that they promote competition and economic welfare and, thus, can be deemed compliant with the principles of the single market as outlined in Art. 101(3) TFEU.

The Horizontal Guidelines provide guidance on applying the HBERs as well as setting out principles for the assessment of other horizontal cooperation agreements and concerted practices under Art. 101 TFEU.

Companies should familiarize themselves with the new regulations to assess whether business models will potentially benefit from the safe harbor provisions of the new HBERs.

Key revisions and updates include:

Clear guidance for mobile telecommunications network operators

The new Guidelines contain a chapter on Mobile Telecommunications Infrastructure Sharing Agreements (‘NSAs’), setting out minimum requirements for operators to fulfill in order to share the use of network infrastructure, operating costs and the cost of subsequent upgrades and maintenance without violating EU competition rules. These requirements include, inter alia, technical and commercial decision-making independence as regards the operators retail and wholesale operations.

Clarification on excluded restrictions in R&D agreements

Certain clauses in R&D agreements are not covered by the HBER exemption. These excluded restrictions include, inter alia, obligations not to challenge the validity of certain intellectual property rights after the completion of the R&D. The new R&D HBER clarifies that, if the agreement contains any of these excluded restrictions, the exemption will still apply to the remaining parts of the agreement as long as the excluded restrictions can be severed from that remaining part and provided that the other conditions of the HBER are met.

Expanded scope of the specialization HBER

The updated definition of ‘unilateral specialization agreement’ now includes agreements of more than two parties, thereby abandoning the former bilateral definition.

Sustainability agreements

As a significant new feature, the horizontal Guidelines now include a chapter on sustainability agreements, a further step by the Commission in the context of the so-called ‘green transition’. When entering into cooperation agreements which pursue sustainability objectives such as addressing climate change, upholding human rights or ensuring animal welfare, businesses are now aided in their competition law risk-assessment.

The Guidelines contain examples of sustainability agreements unlikely to restrict competition and further guidance referring to the very common sustainability standardization agreements. Such agreements may benefit from a ‘soft safe harbor’ if the sustainability standard development process is transparent and inclusive, no obligations are imposed on non-participating undertakings, and the agreement allows for self-imposed higher standards, avoids unnecessary exchange of commercially sensitive information, ensures non-discriminatory access to the outcome of the standard-setting process, and conditions related to price, quality, and market share are met.

Expanded guidance on information exchange

The Guidelines contain a rewritten and updated chapter on direct and indirect information exchange, taking into account recent case law of the Court of Justice of the European Union. Of particular importance for the digital economy are the new elaborations on the use of algorithms and their potential collusive effects arising from increased transparency in the market.

It is worth noting that the chapter on information exchange does not contain a safe harbor provision. Companies should seek legal advice before exchanging any sensitive information or entering into any corresponding agreements.

Bidding consortia

The chapter on commercialization agreements now features a new section on bidding consortia, accompanied by a practical illustration to provide legal certainty on the requirements for joint bidding in public procurement procedures without violating EU competition law by bid rigging or collusive tendering.

Purchasing agreements

The Commission offers extended guidelines for the assessment of joint purchasing and the distinction from (illegal) buyer cartels. In addition to the potential harmful effects on consumers, effects on the upstream supply side are now explicitly addressed.

The revised HBERs will enter into force on 1 July 2023. A grace period of two years has been established, allowing agreements that do not meet the requirements of the new HBERs, but fall within the scope of the previous rules, to maintain their block exemption status. This transitional period ensures that businesses have sufficient time to adjust their agreements and align them with the updated regulations.

The new Horizontal Guidelines will apply from the point of their publication in the EU’s Official Journal in July 2023.

For a legal evaluation of the compatibility of your business model with the new rules as well as with national antitrust laws in the EU, contact our team.