(1)

Regulation (EEC) No 2821/71 empowers the Commission to apply Article 101(3) of the Treaty by regulation to certain categories of agreements, decisions and concerted practices falling within the scope of Article 101(1) of the Treaty which have as their object the research and development of products, technologies or processes up to the stage of industrial application, and the exploitation of the results, including provisions regarding intellectual property rights.

(2)

Article 179(2) of the Treaty calls upon the Union to encourage undertakings, including small and medium-sized undertakings, in their research and technological development activities of high quality, and to support their efforts to cooperate with one another. Cooperation between undertakings on research and development can contribute to achieving the objectives of the European Green Deal (3).

(3)

Commission Regulation (EU) No 1217/2010 (4) defines categories of research and development agreements that the Commission regarded as normally satisfying the conditions laid down in Article 101(3) of the Treaty. That Regulation expires on 30 June 2023. In view of the overall positive experience with the application of that Regulation and the results of the evaluation of that Regulation, it is appropriate to adopt a new block exemption regulation.

(4)

This Regulation aims to facilitate research and development while at the same time effectively protecting competition. This Regulation also aims to provide adequate legal security for undertakings. The pursuit of those objectives should take account of the need to simplify administrative supervision and the legislative framework to the greatest extent possible.

(5)

Below a certain level of market power, it can in general be presumed, for the application of Article 101(3) of the Treaty, that the positive effects of research and development agreements will outweigh any negative effects on competition.

(6)

For the application of Article 101(3) of the Treaty by regulation, it is not necessary to define those agreements which are capable of falling within the scope of Article 101(1) of the Treaty. In the individual assessment of agreements under Article 101(1) of the Treaty, account has to be taken of several factors, and in particular the structure of the relevant market.

(7)

Cooperation in joint or paid-for research and development and in the exploitation of the results is most likely to promote technical and economic progress if the parties contribute complementary skills, assets or activities to the cooperation.

(8)

Consumers can generally be expected to benefit from the increased volume and effectiveness of research and development through the introduction of new or improved products, technologies or processes, a quicker launch of such products, technologies or processes, or a reduction of prices brought about by new or improved products, technologies or processes.

(9)

The joint exploitation of results can take different forms, such as the production and distribution of products, the application of technologies or processes, or the assignment or licensing of intellectual property rights or communication of know-how required for such production or application that substantially contribute to technical or economic progress.

(10)

In order to justify the exemption established by this Regulation, the joint exploitation should relate to products (including goods and services), technologies or processes for which the use of the results of the research and development is indispensable.

(11)

Moreover, all the parties should agree in the research and development agreement that they will all have full access to the final results of the joint research and development, including any arising intellectual property rights and know-how, for the purpose of further research and development, and for the purpose of exploitation, as soon as the final results become available. Access to the results should generally not be limited as regards the use of the results for the purposes of further research and development. However, where the parties, in accordance with this Regulation, limit their rights of exploitation, in particular where they specialise in the context of exploitation, access to the results for the purposes of exploitation may be limited accordingly. Furthermore, where academic bodies, research institutes, or undertakings which supply research and development as a commercial service without normally being active in the exploitation of results participate in research and development, they may agree to use the results of research and development solely for the purpose of further research and development.

(12)

Depending on their capabilities and commercial needs, the parties may make unequal contributions to their research and development cooperation. Therefore, in order to reflect, and to make up for, the differences in the value or the nature of the parties’ contributions, a research and development agreement benefiting from the exemption established by this Regulation may provide that one party is to compensate another for obtaining access to the results for the purposes of further research and development or exploitation. However, the compensation should not be so high as to effectively impede such access.

(13)

Where the research and development agreement does not provide for joint exploitation of the results, the parties should agree in the research and development agreement to grant each other access to their respective pre-existing know-how if such know-how is indispensable for the purpose of the exploitation of the results by the other parties. Any compensation (for example, licence fees) charged should not be so high as to effectively impede access to the know-how by the other parties.

(14)

The exemption established by this Regulation should be limited to research and development agreements that do not afford the undertakings the possibility of eliminating competition in respect of a substantial part of the products, technologies or processes in question. It is therefore necessary to exclude from the block exemption agreements between competitors whose combined share of the market for products, technologies or processes capable of being improved, substituted or replaced by the results of the research and development exceeds a certain level at the time the agreement is entered into.

(15)

Where one party finances several research and development projects carried out by competitors with regard to the same products, technologies or processes, it cannot be excluded that anti-competitive foreclosure effects may arise, in particular where that party obtains the exclusive right to exploit the results vis-à-vis third parties. Therefore, as regards paid-for research and development agreements, the benefit of the exemption established by this Regulation should be limited to agreements under which the combined market share of all the parties involved in the connected agreements, namely the financing party and all the parties carrying out the research and development, does not exceed a certain level.

(16)

However, the exemption established by this Regulation should not be subject to a market share threshold where the parties to the research and development agreement are not competing undertakings in respect of products, technologies or processes capable of being improved, substituted or replaced by the products, technologies or processes arising from the agreement. This includes, for example, agreements relating to the development of products, technologies or processes that would create an entirely new demand, or research and development that is not closely related to a specific product, technology or process, or is not yet targeted at a specific objective.

(17)

There is no presumption that research and development agreements are either caught by Article 101(1) of the Treaty or that they fail to satisfy the conditions of Article 101(3) of the Treaty where the market share threshold set out in this Regulation is exceeded or other conditions of this Regulation are not met. In such cases, it is necessary to conduct an individual assessment of the research and development agreement under Article 101 of the Treaty.

(18)

In order to ensure the maintenance of effective competition during the joint exploitation of the results of the joint or paid-for research and development, provision should be made for the block exemption to cease to apply if the parties’ combined share in the market for the products, technologies or processes arising from the research and development exceeds a certain level. However, the exemption should continue to apply irrespective of the parties’ market shares for a certain period after the commencement of joint exploitation, so as to await stabilisation of their market shares, in particular after the introduction of an entirely new product, and to guarantee a minimum period of return on the investments involved.

(19)

The exemption established by this Regulation should not apply to agreements containing restrictions which are not indispensable to the attainment of the positive effects generated by a research and development agreement. In principle, agreements containing certain types of severe restrictions of competition, such as limitations on the freedom of parties to carry out research and development in a field unconnected to the agreement, the fixing of prices charged to third parties, limitations on output or sales, and limitations on effecting passive sales of the products, technologies or processes arising from the joint or paid-for research and development should be excluded from the benefit of the exemption established by this Regulation, irrespective of the market share of the parties. In this context, field of use restrictions do not constitute limitations of output or sales, and do not constitute territorial or customer restrictions.

(20)

The market share thresholds, the non-exemption of certain agreements and the conditions provided for in this Regulation generally ensure that the agreements to which the block exemption applies do not enable the parties to eliminate competition in respect of a substantial part of the products, technologies or processes in question.

(21)

Agreements between undertakings which are not competing suppliers of products, technologies or processes capable of being improved, substituted or replaced by the results of the research and development and which satisfy the conditions of this Regulation will only eliminate effective innovation competition in exceptional circumstances. It is therefore appropriate to enable such agreements to benefit from the exemption established by this Regulation irrespective of market share and to address any exceptional cases by way of withdrawal of the benefit of the exemption established by this Regulation. The exemption of such agreements pursuant to this Regulation is without prejudice to the competitive assessment of research and development agreements that do not meet the conditions of this Regulation or agreements in respect of which the benefit of the exemption established by this Regulation has been withdrawn.

(22)

This Regulation should indicate typical situations in which it may be considered appropriate to withdraw the benefit of the exemption established by it, pursuant to Article 29 of Council Regulation (EC) No 1/2003 (5).

(23)

As research and development agreements are often of a long-term nature, especially where the cooperation extends to the exploitation of the results, the period of validity of this Regulation should be fixed at 12 years,

(a)

the restriction of the freedom of the parties to carry out research and development independently or in cooperation with third parties:

(b)

the limitation of output or sales, with the exception of:

(c)

the fixing of prices when selling the contract products or licensing the contract technologies to third parties, with the exception of the fixing of prices charged to immediate customers or the fixing of licence fees charged to immediate licensees where the joint exploitation of the results:

(d)

the restriction of the territory in which, or of the customers to whom, the parties may passively sell the contract products or license the contract technologies, with the exception of the requirement to exclusively license the results of the research and development to another party;

(e)

the restriction of active sales of the contract products or contract technologies in territories or to customers which have not been exclusively allocated to one of the parties by way of specialisation in the context of exploitation;

(f)

the requirement to refuse to meet demand from customers in the parties’ respective territories, or from customers otherwise allocated between the parties by way of specialisation in the context of exploitation, where such customers would market the contract products in other territories within the internal market;

(g)

the requirement to make it difficult for users or resellers to obtain the contract products from other resellers within the internal market.