52023SC0167

Annex 4: Other aspects concerned by this initiative

1. Sustainability agreements

2. Standardisation agreements and standard terms

3. Information exchange

4. Joint purchasing agreements

5. Commercialisation agreements

6. Other issues

Glossary

Term	Meaning
BER	Block Exemption Regulation; a regulation which specifies the conditions under which certain categories of agreements are exempted from the prohibition of restrictive agreements laid down in Article 101(1) of the Treaty
CJEU	European Court of Justice
Competing undertakings or competitors	Includes actual and potential competitors
De Minimis Notice	Communication from the Commission - Notice on agreements of minor importance which do not appreciably restrict competition under Article 101(1) of the Treaty on the Functioning of the European Union (De Minimis Notice), OJ C 291, 30.8.2014, p. 1–4
Effect on trade Notice	Commission Notice - Guidelines on the effect on trade concept contained in Articles 81 and 82 of the Treaty, OJ C 101, 27.4.2004, p. 81
Empowerment Regulation	Council Regulation (EEC) No 2821/71 of 20 December 1971 on application of Article 85 (3) of the Treaty to categories of agreements, decisions and concerted practices, OJ L 285, 29.12.1971, p. 46 as amended by Regulation (EEC) No 2743/72 of the Council of 19 December 1972, OJ L 291, 28.12.1972, p. 144
EU	European Union
Evaluation Support Study	Final report on the Evaluation Support Study on the EU competition rules applicable to horizontal cooperation agreements in the HBERs and the Guidelines, produced by VVA, LE Europe and WIFO and published on 6 May 2021
Evaluation SWD	Commission Staff Working Document - Evaluation of the Horizontal Block Exemption Regulations, published on 6 May 2021
Hardcore restriction	A severe restriction of competition, the use of which in an agreement results in the whole agreement being excluded from a block exemption
HBERs	The R&D BER and the Specialisation BER
Horizontal Guidelines	Communication from the Commission - Guidelines on the applicability of Article 101 of the Treaty on the Functioning of the European Union to horizontal co-operation agreements, OJ C 11, 14.1.2011, p. 1-72
IIA	Inception Impact Assessment
ISSG	Inter-service steering group
NCA	National competition authority
R&D	Research and development
R&D BER	Commission Regulation (EU) No 1217/2010 of 14 December 2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to certain categories of research and development agreements, OJ L 335, 18.12.2010, p. 36–42
Regulation 1/2003	Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty, OJ L 1, 4.1.2003, p. 1–25
Safe harbour	The exemption granted by a block exemption regulation from the prohibition of restrictive agreements laid down in Article 101(1) of the Treaty
SMEs	Small or medium-sized enterprises, namely those that employ fewer than 250 people and have an annual turnover not exceeding EUR 50 million and/or an annual balance sheet total not exceeding EUR 43 million. See Commission Recommendation of 6 May 2003 concerning the definition of micro, small and medium-sized enterprises, OJ L 124, 20.5.2003, p. 36-41
Specialisation BER	Commission Regulation (EU) No 1218/2010 of 14 December 2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to certain categories of specialisation agreements, OJ L 335, 18.12.2010, p. 43–47

1.Introduction: economic, political and legal context

Innovation and competitiveness are key to achieving two priorities of the Union, namely the European Green Deal and a Europe fit for the digital age 1 . Competition and competition policy contribute to the achievement of these goals, by stimulating businesses to innovate and invest in order to succeed in the market, while ensuring fair conditions for European businesses of all sizes, so that EU consumers benefit from the advantages of the competitive process. Competition policy contributes to a level playing field, where markets serve consumers, as well as to the achievement of the sustainable development goals 2 .

Efficiency-enhancing cooperation agreements, and in particular R&D agreements and specialisation agreements, can promote innovation and competitiveness in Europe.

Undertakings that wish to enter into cooperation agreements must ensure that their agreements comply with Article 101 of the Treaty on the Functioning of the European Union (“the Treaty”). Article 101(1) of the Treaty prohibits agreements between undertakings that have as their object or effect to restrict competition within the internal market.

Article 101(3) of the Treaty provides that the prohibition set out in Article 101(1) of the Treaty may be declared inapplicable to agreements that are on balance efficiency-enhancing, that is to say that the positive effects of the agreement outweigh its negative effects. Such agreements must fulfil four cumulative conditions: the agreement must (i) contribute to improving the production or distribution of goods or to promoting technical or economic progress, (ii) while allowing consumers a fair share of the resulting benefits. Moreover, the agreement (iii) must not impose restrictions that are not indispensable to the attainment of the aforementioned objectives, and (iv) must not afford the undertakings the possibility of eliminating competition in respect of a substantial part of the products concerned.

To make it easier for undertakings to cooperate in ways which are economically desirable and without adverse effects from the point of view of competition policy, the Commission is empowered by the Council to adopt block exemption regulations. Block exemption regulations define certain categories of agreements that generally fulfil the conditions of Article 101(3) of the Treaty 3 . Agreements that meet the requirements of a block exemption regulation are thus exempted from the prohibition in Article 101(1) of the Treaty.

Based on its positive experience with block exemption regulations for R&D agreements and specialisation agreements adopted in 2000, the Commission adopted two new block exemption regulations superseding those regulations in 2010: Commission Regulation (EU) No 1217/2010 of 14 December 2010 on the application of Article 101(3) of the Treaty to certain categories of research and development agreements (‘R&D BER’) 4 and Commission Regulation (EU) No 1218/2010 of 14 December 2010 on the application of Article 101(3) of the Treaty to certain categories of specialisation agreements (‘Specialisation BER’) 5 , together referred to as the ‘Horizontal Block Exemption Regulations’ or the ‘HBERs’. The HBERs are due to expire on 30 June 2023 6 .

The purpose of the revision of the HBERs is to make it easier for undertakings to cooperate in ways that are economically desirable (general objective); as well as to ensure the effective protection of competition, in particular by avoiding false positives and minimising false negatives 7 , to provide adequate legal certainty to companies, and to simplify the application of competition law to horizontal cooperation agreements by public authorities (specific objectives) 8 .

The HBERs also contribute to several sustainable development goals 9 , namely building resilient infrastructure, promoting inclusive and sustainable industrialization and fostering innovation (SDG 9); and, to a lesser extent, strengthening global partnerships for sustainable development (SDG 17). The HBERs may also contribute to promoting decent work and economic growth (SDG 8) 10 .

The HBERs define categories of R&D agreements and specialisation agreements for which it can be assumed with sufficient certainty that they fulfil the conditions of Article 101(3) of the Treaty and exempt such agreements from the prohibition contained in Article 101(1) of the Treaty. This means that companies that enter into R&D and specialisation agreements that meet the conditions of the relevant block exemption regulation have legal certainty that their agreement complies with Article 101 of the Treaty. However, the fact that an R&D or specialisation agreement does not fall within the scope of the HBERs does not mean that it necessarily infringes Article 101 of the Treaty; it simply means that the parties to the agreement must carry out an individual assessment under Article 101 of the Treaty.

In parallel with the evaluation of the HBERs, the Commission has also carried out an evaluation of the Notice on the definition of the relevant market (“Market Definition Notice”) 11 , which concluded on 16 February 2022 and led to a process of revising the Market Definition Notice, which is still ongoing 12 . The Commission has also carried out an evaluation and impact assessment for the revision of Commission Regulation (EU) No 330/2010 of 20 April 2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to categories of vertical agreements and concerted practices (“2010 VBER”) 13 and accompanying Vertical Guidelines 14 , which led to the adoption of a new Vertical Block Exemption Regulation (“new VBER”) on 10 May 2022 15 and new Vertical Guidelines on 30 June 2022 16 . The new VBER entered into force on 1 June 2022.

Both revision processes, as well as new and existing legislation with potential relevance for horizontal agreements, in particular legislation that also applies to data or digital markets, such as the Digital Markets Act 17 , have also been taken into account, where relevant, in the impact assessment of the HBERs, in order to ensure coherence between the rules.

1.1.Regulation 1217/2010: the R&D BER

The R&D BER aims to facilitate innovation. The introduction of new products and processes to the market stimulates competition within the internal market and helps to strengthen the ability of European industry to compete internationally. R&D plays an essential role, as it promotes and maintains dynamic competition, characterised by initiation and imitation and in doing so assures economic growth.

Agreements between companies in the same sector aimed at coordinating their R&D operations and jointly exploiting the results may limit competition between these companies in the discovery of new products and processes. However, such cooperation agreements may overall lead to economic benefits if the companies bring complementary skills, assets and activities to the cooperation. This also includes scenarios where one company merely finances the R&D activities of the other party/parties to the agreement. Consumers will normally also benefit from such agreements through the introduction of new or improved products or services to the market, a quicker launch of those products or services, or the reduction of prices brought about by new or improved products, technologies or processes.

An R&D agreement may lead to fewer companies carrying out research in, for example, a particular type of medicine. It might, however, also lead to efficiencies where the combination of efforts leads to a quicker or better solution for the identified problem or enables a more costly or risky project than a party would have carried out on its own.

The R&D BER applies to several types of R&D agreements:

I.Agreements whereby the parties engage in joint R&D in relation to products or technologies (‘joint R&D’);

II.Agreements whereby one party pays for R&D to be carried out by the other party (‘paid-for R&D’).

III.Agreements whereby the parties agree to exploit jointly the results of their joint or paid-for R&D.

Where the parties to an R&D agreement are not competing undertakings, the exemption provided by the R&D BER applies for the duration of the joint or paid-for R&D. In addition, where the results are jointly exploited, the exemption continues to apply for 7 years after the resulting products or technologies are first put on the market within the EU. After the end of that 7-year period, the exemption continues to apply as long as the combined market share of the parties does not exceed 25% on the relevant markets.

Where the parties to the R&D agreement are competing undertakings, the exemption provided by the R&D BER is subject to a market share threshold. For R&D agreements between undertakings whose combined market share does not exceed this market share threshold, it can generally be presumed that the positive effects of the R&D agreement outweigh any negative effects on competition. Where the parties are competing undertakings at the time when they enter into the R&D agreement, the exemption applies only if:

I.In the case of joint R&D, the combined market share of the parties does not exceed 25% on the relevant product and technology markets;

II.In the case of paid-for R&D, the combined market share of the financing party and all the parties with which the financing party has entered into R&D agreements relating to the same products or technologies does not exceed 25% on the relevant product and technology markets.

The exemption does not apply to R&D agreements that include certain so-called “hardcore restrictions”, in particular restrictions of the freedom of the parties to carry out R&D in an unrelated field; restrictions of the freedom of the parties to pursue R&D in a related field after the completion of the joint or paid-for R&D, and limitations of output or sales, with certain exceptions.

1.2.Regulation 1218/2010: the Specialisation BER

Specialisation agreements concern cooperation between companies in the manufacture of goods and the preparation of services. Companies may wish to agree that they will each focus on the manufacture of certain products (or the preparation of certain services) in order to operate more efficiently and thereby supply the goods or services more cheaply.

The Specialisation BER provides an exemption from Article 101(1) of the Treaty for certain types of specialisation agreements. The exemption also applies where the parties to such agreements accept exclusive purchase or supply obligations, or jointly distribute the products that they manufacture.

The exemption provided by the Specialisation BER is based on a 20% market share threshold. Specialisation agreements under which the combined market share of the parties does not exceed this 20% threshold can generally be presumed to give rise to economic benefits, in the form of economies of scale or scope, or better production technologies, while allowing consumers a fair share of the resulting benefits.

The exemption does not apply to specialisation agreements that contain certain so-called hardcore restrictions. These include certain types of price fixing, limitations of output or sales and the allocation of markets and customers.

1.3.The Horizontal Guidelines

The HBERs are accompanied by the Horizontal Guidelines 18 . The Horizontal Guidelines provide guidance on the application of Article 101 of the Treaty to a number of common types of horizontal cooperation agreements.

Horizontal cooperation agreements that do not qualify for an exemption under the HBERs require an individual assessment under Article 101 of the Treaty. The Horizontal Guidelines are intended to assist companies to self-assess whether their horizontal cooperation agreements restrict competition within the meaning of Article 101(1) of the Treaty and, if so, whether they meet the conditions of the exception provided by Article 101(3) of the Treaty. The Guidelines are without prejudice to the case law of the Union courts 19 .

1.4.The evaluation of the HBERs and the Horizontal Guidelines

The HBERs entered into force on 1 January 2011 and are due to expire on 30 June 2023 20 . In view of their expiry, the Commission carried out an evaluation to gather evidence on the functioning of the HBERs, together with the Horizontal Guidelines. The results of the evaluation confirmed that the HBERs and the Horizontal Guidelines are still relevant, as they are useful tools that greatly facilitate the self-assessment of horizontal agreements. The evaluation has shown that it is not in the interest of stakeholders to let the HBERs expire 21 . However, the evaluation also identified certain areas where the rules do not function well or as well as they could. Therefore, it was deemed appropriate to revise the HBERs and Horizontal Guidelines following an impact assessment of the proposed changes.

1.5.Other issues addressed by this initiative

This initiative also provided the opportunity to address, by way of clarifications and updates in the revised Horizontal Guidelines, a number of other issues that were raised during the evaluation but which were not such as to provide the Commission with meaningful choices between alternative policy options. These clarifications and updates to the revised Horizontal Guidelines are explained in more detail in Annex 4.

In particular, during the evaluation phase, business organisations (SMEs and larger organisations) and legal organisations (e.g. law firms) raised the lack of clarity and the need for updates in the Horizontal Guidelines regarding the assessment of agreements pursuing sustainability goals and agreements relating to data pooling, data sharing and mobile infrastructure sharing, as well as the need to update the Horizontal Guidelines, notably to reflect market developments and new case law, and to clarify and simplify the Guidelines where possible. The revised draft Horizontal Guidelines address these issues, for example they include new chapters on agreements pursuing sustainability goals and mobile telecoms infrastructure sharing agreements, and they update the guidance on information exchange to cover new models of cooperation that have appeared as a result of digitisation and to reflect new case law. For details, please see Annex 4 of this report.

2.Problem definition

2.1.What are the problems?

Regulation 1/2003 abolished the notification of agreements to the Commission established by the previous Regulation (EEC) No 17/62 22 . Regulation 1/2003 also created a system of parallel competences, in which the Commission applies Article 101 of the Treaty in parallel with the national competition authorities of the Member States (‘NCAs’) and the national courts 23 . Companies can no longer notify their agreements to the Commission in order to obtain an individual exemption from the competition rules. They have to self-assess the compliance of their agreements with Article 101 of the Treaty. In order to do this, companies can rely on the existing case law of the Union courts, as well as on the enforcement practice of the Commission and the NCAs. However, the assessments in such judgments and decisions are case-specific and are not always directly transposable to other markets and practices.

Self-assessing agreements can create a significant burden, especially for micro, small and medium-sized enterprises (SMEs) 24 , which may lack the necessary resources and/or legal expertise 25 . The HBERs and Horizontal Guidelines therefore aim to provide greater legal certainty and more guidance for (all) companies that enter into horizontal cooperation agreements to assist them with their self-assessments.

During the evaluation of the HBERs and Horizontal Guidelines and the consultations in the subsequent impact assessment phase of this initiative, two types of problems were identified.

First, the evaluation (notably the Evaluation Support Study) 26 found that especially SMEs find it difficult to apply the HBERs and the Horizontal Guidelines in order to self-assess the compliance of their R&D and specialisation agreements with Article 101 of the Treaty.

Second, there may be specific cases in which R&D agreements that fall within the R&D BER may raise competition concerns, in particular concerns relating to innovation competition 27 . This problem appears to apply in particular to R&D agreements for which it is not possible to calculate market shares at the time the agreement is entered into. This may be the case, for example, where the joint or paid-for R&D relates to the development of products or technologies that would not improve, substitute or replace existing products or technologies but would instead create an entirely new demand, or where the R&D relates to an objective that cannot yet be defined in terms of specific products or technologies.

2.1.1.SMEs find it difficult to apply the HBERs

The companies relying on the safe harbours provided by the HBERs are a diverse group, including companies of different sizes (e.g. SMEs, large companies, start-ups, etc.), different backgrounds (e.g. private sector, academic sector, such as universities and research institutes, etc.), and offering different services (e.g. supplying R&D as a commercial service, financial support, etc.). R&D cooperation agreements may be entered into by anywhere between 2 and 50 parties. R&D cooperation agreements most commonly involve between 3-7 entities, with a mixture of R&D centres, larger industry partners and SMEs (for example, promoted by R&D programmes of the European Union). The purpose of the collaboration is to bring different know-how, skills and intellectual property to the table, to share among the participants for the performance of the R&D 28 .

SMEs represent a large share of the Union economy (50% of Europe’s GDP 29 ) and play a major role in spurring economic development and innovation 30 . According to the 2020/2021 SME Annual Report, in 2020, slightly more than 21 million SMEs were active in the EU-27, accounting for 99.8% of all enterprises in the EU-27 non-financial business sector (‘NFBS’) 31 . Of this total, 93% were micro enterprises 32 . Furthermore, 53% of the total value added produced by the EU-27 NFBS and 65% of total EU-27 NFBS employment were generated by EU-27 SMEs in 2020 33 . 50% of all SMEs undertake innovation activities 34 . In 2020 and 2021, the investment in R&D of SMEs located in the EU amounted to EUR 1.1 billion 35 and EUR 1.4 billion 36 respectively.

R&D cooperation agreements are important for SMEs. According to a 2020 EU Survey on Industrial R&D Investment Trends, R&D is performed either in-house (75%), in collaboration with other companies (17%) or is outsourced (8%). When R&D is performed in collaboration with one or more companies, such R&D partners are mainly SMEs (58%) and, to a lesser extent, large companies (42%) 37 . SMEs often lack technical skills, funding and/or intellectual property rights that allow them to fully develop or scale up promising discoveries on their own. Cooperation agreements may provide them with access to funding, additional knowledge and other necessary resources. Similarly, specialisation agreements are also particularly relevant for SMEs. According to the Evaluation Support Study, specialisation/production agreements are among the most frequently quoted cooperation agreements 38 . Experts consulted in the course of the impact assessment indicated that SMEs are the natural candidates for specialisation agreements 39 , in particular because SMEs generally have greater production capacity constraints and they generally have less ability to enter manufacturing markets, due to the high investments required 40 . Moreover, SMEs may rely on supply relationships to address production shortages, to test entering new markets or to improve the reach of their offer to their clients 41 .

However, SMEs reported that they face difficulties in applying the HBERs to self-assess the compliance of their R&D and specialisation agreements with competition law 42 . While all stakeholders face the problems described in the following sub-sections, these problems are particularly acute for SMEs because SMEs usually lack the necessary resources and/or legal expertise (e.g. in-house lawyers specialised in competition law) to assist with this self-assessment. In case of legal uncertainty, SMEs may prefer to err on the side of caution and abandon the cooperation 43 , even though SMEs are more likely to have market shares that fall below the thresholds established by the HBERs 44 . This approach might result in missed opportunities and innovation delays.

Therefore, horizontal cooperation tends to be particularly relevant to help SMEs overcome their shortcomings 45 . SMEs are often dependent on external support and have to bear the associated costs in order to assess the compliance of their cooperation agreements with competition law, or they have to rely on the advice and expertise of their counterparty in the cooperation agreement, in particular where the counterparty is a large company. For these reasons, difficulty in applying the HBERs is a problem that particularly affects SMEs.

2.1.1.1.Problems faced by SMEs that are common to both the R&D and Specialisation BERs

According to the findings of the Evaluation Support Study, although SMEs enter into R&D and specialisation agreements, they seldom consult the HBERs or the Horizontal Guidelines 46 . The SMEs that do consult these documents stated that they encounter difficulties in applying the HBERs. These difficulties can be summarised as follows:

First, SMEs reported problems with the definitions used in the HBERs. In particular, the definitions were found to be too complex and in need of further clarifications and guidance to avoid misinterpretations 47 .

Second, SMEs especially noted problems with defining the relevant market and calculating market shares when self-assessing whether their R&D or specialisation agreements benefit from the HBERs. A market share threshold is an objective criterion that is intended to provide legal certainty to companies and authorities concerning agreements between companies that lack significant market power, which are presumed to generally create benefits that outweigh their potential restrictive effects 48 . However, SMEs often lack specialised knowledge in competition law. This makes it difficult for them to define the relevant product market (which may be product and/or technology markets) and the relevant geographic market, and to calculate market shares 49 .

Third, SMEs complained about the technicalities and complexity of applying other provisions of the HBERs, especially the conditions applicable to the exemption (such as the list of hardcore restrictions). Stakeholders commented that this may lead to misinterpretations. In their view, this problem is compounded by the fact that there is very little case law on the application of the HBERs 50 .

During the evaluation phase, respondent SMEs said that these factors were the main sources of difficulty for applying the HBERs and/or discouraged them from entering into R&D and specialisation agreements 51 .

2.1.1.2.Problems faced by SMEs that are specific to the R&D BER

In addition to the market share threshold and the list of hardcore restrictions, the R&D BER also imposes other conditions for exemption.

I.To be exempted, the R&D agreement must grant all the parties full access to the final results of the R&D, including any resulting intellectual property rights and know-how, for the purposes of further R&D and exploitation. If the parties limit their rights of exploitation in accordance with the R&D BER, access to the R&D results for the purposes of exploitation may be limited accordingly.

II.Where the R&D agreement does not provide for joint exploitation, each party must have access to any pre-existing know-how of the other parties, if such know-how is indispensable for the exploitation of the results of the joint or paid-for R&D. This exchange of pre-existing know-how may be compensated, but the compensation must not be so high as to effectively prevent such access.

III.Any joint exploitation may only concern results which are protected by intellectual property rights or constitute know-how, and which are indispensable for the manufacture of the contract products or the application of the contract technologies.

The evaluation (notably the Evaluation Support Study 52 ) indicated that the self-assessment of these conditions for exemption was particularly challenging for SMEs, due to the administrative burden linked to the assessment and the lack of technical skills of SMEs.

2.1.1.3.Problems faced by SMEs that are specific to the Specialisation BER

The Specialisation BER applies to three categories of specialisation agreements:

I.unilateral specialisation agreements between two parties that are active on the same product market, whereby one party agrees to fully or partly cease production of certain products or to refrain from producing those products and to purchase them from the other party, which agrees to produce and supply the products;

II.reciprocal specialisation agreements between two or more parties active on the same product market which agree on a reciprocal basis to fully or partly cease or refrain from producing certain but different products and to purchase those products from the other parties, which agree to produce and supply them;

III.joint production agreements, whereby two or more parties agree to produce certain products jointly.

In the evaluation, law firms and legal associations commented that they have difficulty understanding these definitions 53 and determining whether their specialisation agreements fit into one of these three categories. This is particularly true for SMEs 54 . In this connection, SMEs commented that one of the main sources of difficulty in applying the Specialisation BER lies in the definition of unilateral specialisation agreements, which is limited to agreements between two parties, whereas the other types of specialisation agreements allow for two or more parties to cooperate.

2.1.2.Innovation competition may not be adequately protected in certain cases where companies enter into R&D agreements for which it is not possible to calculate market shares

Competition policy is concerned not only with static competition, namely ensuring that the market allocates existing resources efficiently; it also concerns dynamic competition, namely the process by which new products and technologies are brought to the market. Key to this process are investment and innovation.

Companies compete at the R&D stage to win the race to bring new products or technologies to the market. Where two or more companies are capable of engaging in R&D relating to the same objective independently, protecting the competitive dynamic between them preserves the possibility for more than one new product or technology to reach the market. If such companies cooperate at the R&D stage, this may eliminate innovation competition between them and lead to a reduction in the number of products or technologies that reach the market 55 . For example, during the COVID-19 pandemic, several companies competed to bring a new vaccine against COVID-19 to the market. If all those companies had decided to cooperate on a single R&D project, this could have led to only one COVID-19 vaccine being brought to the market, rather than several vaccines, which proved to have different strengths and weaknesses.

The protection of innovation competition is illustrated by the Commission’s recent practice in merger control. Article 2 of the EU Merger Regulation 56 requires the Commission to assess whether notified concentrations 57 would significantly impede effective competition in the internal market or in a substantial part of it. Within this framework, “competition” is understood to include product and price competition, but also innovation competition 58 . A merger between companies that conduct R&D in the same innovation space may result in the reduction or elimination of innovation competition, for example, the merged entity may decide to discontinue or delay competing lines of research. Since 2011, the Commission has intervened against a number of mergers on the ground that they would harm innovation competition 59 . For example, the Commission raised concerns about innovation competition in the Dow/DuPont 60 , Bayer/Monsanto 61 and Deutsche Börse/NYSE 62 merger cases.

For example, in Dow/DuPont the Commission assessed the impact of the proposed transaction at the level of innovation efforts by the parties and their competitors.

The Commission’s assessment was based on the consideration that a merger can reduce innovation incentives primarily by suppressing innovation competition between the merging parties. Before the merger, the parties would have an incentive to capture current and future sales from each other by introducing new or improved products, but post-merger they would have reduced incentives to do so. Post-merger, an innovation by one of the merging parties will cannibalise the profits of the other merging party, and that effect is internalized with the merger. This means that the combined entity will now take into account the fact that innovation by each of the merging firms will result in a loss of expected profits for the other merging party. The diversion of sales between the merging parties becomes an additional opportunity cost of innovation for the merged entity. Following the merger, this new opportunity cost leads to lower incentives to innovate (absent merger-specific efficiencies). This effect is stronger if the merger brings together two significant innovators in a concentrated market where there are few other innovators and where, absent the merger, the merging parties would have been likely to divert sales from each other by investing in innovation.

In principle, cooperation agreements between undertakings that are engaged in (or capable of engaging in) independent R&D efforts pursuing the same objective can raise similar competition concerns to mergers, where there are few third parties competing in the same innovation space, especially when the parties exploit the results of their cooperation jointly. While it is notable that there have been no recent Commission or NCA decisions in relation to such R&D agreements, it is also notable that the R&D BER does not make specific provision for R&D agreements in which it is not possible to calculate market shares and block-exempts such agreements without consideration of the competitive dynamic at the R&D level 63 . Accordingly, it is possible that, in certain cases, innovation competition may not be adequately protected by the R&D BER.

2.2.What are the problem drivers?

The two problems identified in Section 2.1 have distinct drivers.

2.2.1.Driver 1: SMEs have limited internal resources and generally lack specialised knowledge in competition law

Under the regime introduced by Regulation 1/2003, companies are required to self-assess the compliance of their cooperation agreements with Article 101 of the Treaty. Based on this self-assessment, they then decide whether or not to enter into a particular horizontal cooperation agreement.

The role of the HBERs in this regime is to make it easier for undertakings to cooperate in pro-competitive ways, to ensure effective protection of competition, to provide adequate legal certainty for undertakings and to simplify the application of Article 101 of the Treaty by public authorities 64 . However, in meeting these requirements, the HBERs do not distinguish between different types of companies, in particular companies of different sizes, for example SMEs 65 .

Moreover, the text of the HBERs can be difficult to understand. The rules are technical and concise, in order to ensure legal precision. For non-expert readers, this can increase the complexity of the text. In addition, the Horizontal Guidelines currently do not have a specific section providing guidance on the application of the HBERs. Lastly, there is very little decisional practice or case law on the HBERs at EU or national level, which makes interpretation of the texts more difficult.

This affects in particular SMEs. SMEs are subject to internal resource constraints as regards capital and human resources, as well as specialised knowledge, due to their limited size. As a result, SMEs usually need external support in order to self-assess their agreements, which increases the administrative and compliance burden 66 .

The main drivers identified behind the problems that SMEs encounter is therefore that (i) the texts of the HBERs are too complex for them and that (ii) the Horizontal Guidelines provide insufficient guidance on their interpretation. Moreover, (iii) the Horizontal Guidelines do not make sufficiently clear for a non-expert reader that the HBERs should be applied in combination with other relevant Commission notices and guidelines, which make clear that many agreements involving SMEs are unlikely to appreciably restrict competition within the meaning of Article 101(1) of the Treaty. These include the De Minimis Notice 67 and the Effect on Trade Notice 68 .

2.2.2.Driver 2: The R&D BER does not make specific provision for R&D agreements for which it is not possible to calculate market shares

As explained in Section 1.1, in order to ensure that the safe harbour does not apply to R&D agreements between competing undertakings that have market power, the R&D BER contains a market share threshold of 25% 69 . This threshold refers to the relevant market for products or technologies that are capable of being improved, substituted or replaced by the products or technologies that result from the joint or paid-for R&D. However, for some R&D agreements, it may not be possible to calculate market shares, for example because the R&D relates to the development of products or technologies that would not improve, substitute or replace existing products or technologies but would instead create an entirely new demand, or where the R&D relates to an objective that cannot yet be defined in terms of specific products or technologies. For the purpose of applying the R&D BER, the parties to such agreements are treated as non-competitors and therefore the market share threshold does not apply 70 . This is confirmed by point 126 of the Horizontal Guidelines, which states: “the R&D Block Exemption Regulation treats those agreements as agreements between non-competitors”.

The question is therefore whether this category of R&D agreements should generally benefit from the safe harbour provided by the R&D BER, even though, at the date when they enter into the agreement, the parties may be engaged in comparable independent R&D efforts and their cooperation may in certain cases lead to a reduction or elimination of innovation in the field in question.

It is nonetheless important to place this problem driver in context. First, it appears unlikely that there will be a large number of R&D agreements in which it is not possible to identify products or technologies that are capable of being improved, substituted or replaced by the results of the joint R&D. Second, where R&D is not linked to existing products or technologies but relates to products or technologies that will create an entirely new demand, the outcome of the R&D is generally less certain, such that there is a lower risk that agreements relating to this type of R&D will give rise to an appreciable restriction of competition in the internal market 71 .

2.3.What are the consequences of the problems and who is affected?

As a consequence of the problems identified in Section 2.1, SMEs may prefer to err on the side of caution and, in case of legal uncertainty, abandon the cooperation. This may result in missed opportunities and innovation delays. Secondly, it is possible that competition in innovation may not be adequately protected in the case of certain R&D agreements for which it is not possible to apply a market share threshold, in particular where the parties to the agreement are engaged in independent R&D in the same field at the time when they enter into the agreement and where there are is not a sufficient number of independent R&D efforts remaining in that field.

Furthermore, overall, the identified problems increase the (self-assessment) compliance costs for businesses. During the evaluation and impact assessment 72 , stakeholders stated repeatedly that legal certainty is the main factor that leads to lower compliance costs. Stakeholders indicated that the costs linked to ensuring the compliance of R&D and specialisation agreements with Article 101 of the Treaty, notably fees for lawyers and economists, would increase in the absence of the HBERs, as the legal certainty they provide for the self-assessment that businesses have to conduct would decrease or even disappear. They also indicated that the low level of legal certainty in the areas where the rules were indicated to not function well is primarily due to the lack of clarity of certain provisions, and the fact that the rules are not fully adapted to market developments.

As regards the stakeholders that are affected by the identified problems, the first problem primarily affects SMEs that use the HBERs in their day-to-day operations to self-assess the compatibility of their R&D and specialisation agreements with EU competition rules, whereas the second problem may affect competition more generally.

Several stakeholders stressed that SMEs are particularly affected by the cost increases mentioned above, since they do not have the human and financial resources needed to perform what is, from their perspective, a complex self-assessment under Article 101 of the Treaty. For example, compliance costs are generally higher for SMEs than for large companies because SMEs usually have to hire external legal and/or economic experts to assist with the self-assessment of their agreements, whereas large companies are more likely to have in-house lawyers with knowledge of competition law.

NCAs and national courts may also be affected by the problems, as the HBERs are binding on them and they typically take into account the Horizontal Guidelines to interpret the HBERs in their enforcement practice. To the extent that, in the areas identified above, the rules do not function well or not as well as they could, they do not fully meet their objectives, in particular the objective of facilitating the enforcement work of the NCAs and national courts and of ensuring an adequate level of protection of innovation competition 73 .

Indirectly, the problems also affect consumers, since strong competition in R&D and via specialisation will generally lead to lower prices, increased quality and variety of products and services, more choice and innovative products and services for consumers.

2.4.How likely is the problem to persist?

2.4.1.The problem of the difficulty experienced by SMEs in applying the HBERs

Based on the input received by the Commission, the problems for SMEs in applying the HBERs are likely to persist. To the extent that universities and research institutes continue to “spin out” 74 into private companies R&D projects relating to products or technologies that have commercial potential, the number of SMEs specialising in R&D may increase, which could increase the extent of this problem.

2.4.2.The problem of a potentially inadequate level of protection provided by the antitrust rules for innovation competition

As set out in section 2.1.2, the problem of a potential inadequate level of protection provided by the antitrust rules for innovation competition is linked to the lack of specific provisions for R&D cooperation agreements for which market shares cannot be calculated at the time the agreement is entered into. This problem is likely to persist.

3.Why should the EU act?

3.1.Legal basis

Under the Empowerment Regulation, the Commission is empowered by the Council to adopt block exemption regulations, which define certain categories of agreements that generally fulfil the conditions of Article 101(3) of the Treaty.

3.2.Subsidiarity: Necessity and added value of EU action

Pursuant to Article 3 of the Treaty, the EU has exclusive competence to establish competition rules necessary for the functioning of the internal market. The HBERs provide a safe harbour from the application of Article 101 of the Treaty, which can only be granted at EU level.

As regards the necessity and added value of adopting revised HBERs, rather than allowing the HBERs to expire, the evaluation indicates that the HBERs simplify self-assessment and increase legal certainty for companies entering into R&D and specialisation agreements, as well as providing a common framework for the application of Article 101 of the Treaty to these types of agreements by NCAs and national courts.

Moreover, with regard to SMEs, an EU level approach ensures legal certainty and a harmonised approach throughout the internal market, which is likely to reduce administrative and compliance burdens. With regard to early-phase R&D agreements, R&D activities often have a worldwide (or at least EEA-wide) dimension, therefore an EU level approach is the most appropriate to ensure harmonisation and avoid inconsistencies between the Member States.

4.Objectives: What is to be achieved?

4.1.General objectives

The initiative consists of revising HBERs together with the accompanying Horizontal Guidelines. The general objective of the HBERs is to make it easier for companies to cooperate in ways which are economically desirable and without adverse effects from the point of view of competition policy.

The revision aims to provide businesses, as well as NCAs and national courts, with simpler, clearer and up-to-date rules and guidance that can help them to self-assess the compliance of their R&D and specialisation agreements with Article 101 of the Treaty.

4.2.Specific objectives

The HBERs also have three specific objectives, namely (i) to ensure the effective protection of competition; (ii) to provide companies (including SMEs) with adequate legal certainty when they enter into horizontal cooperation agreements, and (iii) to simplify the administrative supervision of horizontal cooperation agreements by the Commission, NCAs and national courts.

5.What are the available policy options?

5.1.What is the baseline from which options are assessed?

Currently, the assessment of R&D and specialisation agreements under EU competition law is subject to the HBERs and the Horizontal Guidelines. For the reasons set out in this Section, these rules are the relevant baseline for assessing the policy options identified to address the two areas mentioned in Section 2 in which the rules are not functioning well or as well as they could.

First, the evaluation has shown that the HBERs, together with the Horizontal Guidelines, overall constitute useful instruments that facilitate the assessment of horizontal cooperation agreements and increase legal certainty as compared to a situation without HBERs and Horizontal Guidelines. Indeed, block exemption regulations relating to R&D and specialisation agreements have existed at EU level since 1984.

Second, the current versions of the HBERs, together with the Horizontal Guidelines, constitute the relevant baseline, rather than an earlier version of the HBERs and Horizontal Guidelines, because the changes introduced in 2010 have proven to be still relevant (according to the results of the evaluation).

As explained in more detail in Section 2.4 above and again in the sections below, under the baseline scenario, which is maintaining the current rules, the identified problems are likely to persist.

In particular, the problem of the difficulties experienced by SMEs in applying the HBERs is unlikely to change, and it is possible that the scope of this problem may increase if the number of SMEs engaging in R&D increases, for example as a result of universities and research institutes setting up “spin offs” to commercialise the results of their R&D activity.

The problem relating to the potentially inadequate level of protection provided by the antitrust rules for innovation competition is also likely to persist if the current rules are maintained.

5.2.Description of the policy options

The Inception Impact Assessment (“IIA”) identified eight policy options to facilitate the application of the HBERs by SMEs and to adapt the rules to new market developments. These initial policy options were based on the evidence gathered in the evaluation, which is summarised in Annex 2 of this report. The policy options were further developed and restructured during the impact assessment phase, based on the evidence gathered, including the enforcement experience of DG Competition and the NCAs, as well as feedback from stakeholders, as described in more detail below.

The baseline scenario entails that horizontal cooperation agreements concluded by SMEs concerning R&D and specialisation would continue to be exempted subject to the market share thresholds of 25% and 20% respectively. The conditions for exemption would remain the same. In addition, the guidance in the Horizontal Guidelines would not substantially change, except for updates to reflect case law and legislation that have occurred in the past 10 years.

The baseline scenario also entails that R&D agreements for which it is not possible to calculate market shares at the time the agreement is entered into would continue to be treated as agreements between non-competitors for the purposes of applying the R&D BER, namely the agreement would not be subject to a market share threshold, but would still have to fulfil the other conditions for exemption set out in the R&D BER.

5.2.1.Options to facilitate the application of the HBERs by SMEs

According to the results of the evaluation, with regard to both R&D and Specialisation agreements, SMEs find it difficult to apply the HBERs in order to self-assess their agreements (see Section 2.1.1). Policy Option 1 was proposed to address this problem.

Option 1 would provide a specific exemption in both HBERs for agreements concluded by SMEs. The aim of this policy option would be to make self-assessments by SMEs significantly easier and thereby encourage the participation of SMEs in R&D and specialisation agreements.

The exemption would be subject to specific conditions developed for SMEs to avoid the need for them to define relevant markets or calculate market shares when assessing their agreements. However, defining these conditions is challenging, and entails some risks, such as generating false positives (i.e. exempting agreements that may raise competition concerns) During the impact assessment phase, the following conditions were considered: (i) including conditions relating to the turnover of the parties, which was a relevant criterion for identifying SMEs. However, as such absolute parameters may not reflect whether the SMEs have market power on the market(s) affected by the agreement (for example, an SME could hold market power in a niche market), additional conditions would be required to ensure that the exemption only covers agreements that do not raise competition concerns 75 . These might include the presence of a minimum number of competitors in the market following the conclusion of the R&D agreement, or, in the case of the Specialisation BER, the size of the total product market covered by the agreement and the forecast sales/revenues derived from the sale of the specialisation products 76 .

With regard to R&D agreements, the evaluation also found that SMEs had difficulties applying, in particular, certain conditions for the exemption of R&D agreements that were considered technical and complex, namely the conditions in Article 3 of the R&D BER relating to the parties’ access to the final results of the joint R&D and, in certain cases, to pre-existing know-how (the so-called ‘access conditions’) 77 . Policy Option 2 was proposed to address this problem.

Option 2 would, for R&D agreements concluded by SMEs, limit or remove the access condition(s) in Articles 3(2) and 3(3) of the R&D BER requiring the parties to the agreement to provide full access to the final results of the joint R&D, as well as access to pre-existing know-how in order to benefit from the block exemption. During the impact assessment phase, it was considered whether to modify or remove these access rights. The modifications considered focused on:

I.modifying the scope of the access rights, for example, in terms of use/exploitation activity of the final results or in terms of the parties to which these access rights must be granted. The current conditions of the R&D BER require that full access to the final results be granted to all the parties, as well as access to indispensable pre-existing know-how; and

II.modifying the duration of the access rights, for example, access would be granted for the duration of the R&D agreement but not beyond. Currently, the R&D BER does not specify the duration of the access rights.

With regard to specialisation agreements, SMEs commented that one of the main sources of difficulty in applying the Specialisation BER lies in the scope of the definition of unilateral specialisation agreements. Policy Option 3 was proposed to address this problem.

Option 3 would expand the scope of the Specialisation BER by extending the definition of unilateral specialisation agreements to include agreements entered into between more than two parties. This would be particularly relevant for SMEs, since, due to their size and limited resources, an effective specialisation may require the cooperation of more than two parties 78 .

Since the aim of these three policy options was to lessen the burden of applying the HBERs for SMEs, a combination of the three options was not considered advisable, as it could increase (instead of decreasing) the complexity of the HBERs, by adding new rules (Option 1) and modifying existing ones (Options 2 and 3).

In addition, the introduction of further clarifications in the HBERs and the Horizontal Guidelines was considered to address more general issues raised during the evaluation. These clarifications were of a technical nature and did not require impact assessment, as in each case these did not entail any meaningful alternative policy options.

The clarifications considered consisted of including in the Horizontal Guidelines further guidance on the application of the thresholds, the hardcore restrictions and – in the case of R&D – the conditions for exemption. This could take the form of new sections in the Horizontal Guidelines, but could also consist in clarifications in the HBERs themselves (for instance by restructuring certain provisions in a more logical manner or inserting additional explanatory wording in the recitals of the HBERs).

The possibility of including more explicit references in the Horizontal Guidelines to two existing Commission Notices that are particularly relevant for agreements involving SMEs was also considered. These Commission Notices are, first, the De Minimis Notice, which provides an enforcement safe harbour for agreements between undertakings that are unlikely to have appreciable effects on competition. This safe harbour applies on condition that the combined market shares of the parties do not exceed 10% when they are competitors and the agreements do not have as their object to restrict competition.

Second, the Effect on Trade Notice states that agreements between SMEs will normally not be capable of affecting trade between Member States to an appreciable degree, save when the parties engage in cross-border activity 79 . The Notice states that the Commission will apply a presumption that agreements are not capable of appreciably affecting inter-state trade (and that they therefore fall outside Article 101 of the Treaty) where (i) the parties’ combined market share on any relevant market affected by the agreement does not exceed 5%, and (ii) in the case of horizontal agreements, the parties’ combined annual EU turnover in the products covered by the agreement does not exceed EUR 40 million. The presumption applies irrespective of the nature of the restrictions contained in the agreement. The Notice states that where this presumption applies, the Commission will normally not institute infringement proceedings. Furthermore, where undertakings assume in good faith that an agreement is covered by the presumption, the Commission will not impose fines 80 .

5.2.2.Options to address the potentially inadequate level of protection for innovation competition

Two policy options were identified to address the potentially inadequate level of protection for innovation competition.

Under Option 1, the block exemption of R&D agreements for which it is not possible to calculate market shares at the time the agreement is entered into would be subject to a new threshold linked to the competitive dynamic at R&D level, i.e. the level of residual competition at R&D level.

Under this option, the parties to the R&D agreement would first have to determine whether they are competitors at the level of innovation. This would be case if the parties would be able to independently pursue the R&D effort covered by the proposed R&D agreement (i.e. where the cooperation is not necessary to conduct the R&D effort because the parties have the necessary skills and resources).

The next step would be to determine whether the R&D agreement fulfils new exemption conditions relating to the degree of residual competition at R&D level, i.e. R&D agreements (i) concluded by companies that compete at R&D level and (ii) for which it is not possible to calculate market shares at the time the agreement is entered into would be exempted only in cases where (iii) there remained a sufficient number of comparable third-party R&D efforts (i.e. the parties and three additional undertakings, the ‘three competitors rule’ or ‘3+ rule’) . The parties would have to assess their compliance with these three conditions in order to determine whether their agreement could benefit from the block exemption.

This option could be complemented by additional guidance in the R&D BER and in the Horizontal Guidelines, which would explain the scenarios in which the new conditions would apply and the factors to be taken into account in the assessment of this category of R&D agreements under Article 101 of the Treaty in individual cases outside the R&D BER.

Option 2 would maintain the block exemption for R&D agreements for which it is not possible to calculate market shares at the time the agreement is entered into, subject to the fulfilment of the other conditions set out in the R&D BER (e.g. access conditions, absence of hardcore restrictions, etc.). This option would not introduce any new threshold, but it would insert a new provision in the R&D BER referring to the power of the Commission and NCAs to withdraw the benefit of the exemption in cases where an individual R&D agreement does not fulfil the conditions of Article 101(3) of the Treaty, in particular where the agreement eliminates effective innovation competition. This new provision would be complemented by additional guidance in the R&D BER and the Horizontal Guidelines setting out scenarios in which withdrawal of the block exemption is particularly likely.

Under this option, companies entering into R&D agreements for which it is not possible to calculate market shares at the time the agreement is entered into would not have to assess the compliance of their agreement with new conditions in order to benefit from the safe harbour and would continue to enjoy the same level of legal certainty. The added value of this option (compared to the baseline) is that it would give increased prominence to the withdrawal mechanism and thereby signal to businesses that the Commission and NCAs may nonetheless intervene against R&D agreements that eliminate effective innovation competition.

Options 1 and 2 are alternatives.

5.2.2.1.Conditions applicable to the withdrawal of the benefit of a block exemption

For the purpose of assessing Option 2 (of Problem 2) , it is important to clarify the substantive and procedural rules that apply where competition authorities wish to withdraw the benefit of a block exemption in individual cases.

Pursuant to Article 29(1) of Regulation 1/2003, the Commission may withdraw the benefit of a block exemption regulation where it finds that in a particular case an agreement that is covered by a block exemption regulation has certain effects that are incompatible with Article 101(3) of the Treaty.

NCAs similarly have the power to withdraw the benefit of a block exemption in relation to agreements that have effects that are incompatible with Article 101(3) of the Treaty in the territory of their Member State (or a part of that territory) that has all the characteristics of a distinct geographic market.

Where the Commission wishes to withdraw the benefit of a block exemption regulation, it has the burden of proving, first, that the agreement concerned restricts competition within the meaning of Article 101(1) of the Treaty and, second, that the agreement has effects that are incompatible with Article 101(3) of the Treaty, namely that the agreement fails to fulfil at least one of the four cumulative conditions of Article 101(3) of the Treaty. The Commission must set out its preliminary findings in relation to Article 101(1) and Article 101(3) of the Treaty in a statement of objections, to which the parties have a right of reply.

Where the Commission decides to withdraw the benefit of a Block Exemption Regulation, it may combine the withdrawal decision with a decision finding an infringement and requiring the parties to bring the infringement to an end. However, any such withdrawal decision produces effects only for the future, which means that the exempted status of the agreement remains unaffected for the period preceding the date on which the withdrawal becomes effective.

5.2.3.Table showing how the proposed policy options are linked to the problems identified during the evaluation

Problem	Driver	Options
SMEs find it difficult to apply the HBERs.	SMEs have limited internal resources and usually lack specialised knowledge in competition law.	Option 1: provide a specific exemption in both HBERs for agreements concluded by SMEs.
		Option 2: limit or remove the access condition(s) in the R&D BER requiring the parties to grant each other full access to the final results of the joint R&D, as well as access to pre-existing know-how.
		Option 3: expand the scope of the Specialisation BER by extending the definition of unilateral specialisation agreements to include agreements between more than two parties.
Potentially inadequate level of protection for innovation competition	The scope of the R&D BER may be too wide as regards R&D agreements for which it is not possible to calculate market shares	Option 1: the block exemption of R&D agreements for which it is not possible to calculate market shares would be subject to a newly introduced threshold linked to the competitive dynamic at R&D level, i.e. the level of residual competition at R&D level.
		Option 2: introduce a new provision in the R&D BER referring to the power of the Commission and NCAs to withdraw the benefit of the exemption in cases where a particular agreement eliminates effective innovation competition.

5.3.Options discarded at an early stage

The Inception Impact Assessment set out eight policy options. Three of these options were discarded at an early stage of the Impact assessment phase. These options were:

I.verify whether horizontal subcontracting agreements with a view to expanding production in general would meet the requirements of Article 101(3) and hence should be included in the scope of the Specialisation BER;

II.verify the conditions for exemption under the Specialisation BER as to the requirement of joint distribution for unilateral or reciprocal cooperation;

III.whether the conclusion of pro-competitive R&D agreements by all types of market participants (not only SMEs) could be encouraged by allowing for limitations to the requirement(s) of full access to the results and/or access to pre-existing know–how;

The first two policy options were discarded because the feedback from the public consultation 81 revealed that reviewing the scope of the Specialisation BER in this way would rather increase the complexity of the existing text and these issues could be addressed more effectively through the introduction of further clarifications in the Horizontal Guidelines (for example in the form of a specific section providing guidance on the interpretation of the Specialisation BER).

The last policy option is a variation of the policy option for SMEs as regards limiting or removing the access conditions of the R&D BER (see Option 2 described in Section 5.2.1). The scope of the discarded policy option was broader since it concerned all types of market participants. However, due to the strong link between these policy options, the broader policy option was quickly discarded when the stakeholder workshop held in October 2021 showed that even a narrower policy change would have limited benefits and several disadvantages (see Sections 6.1 and 7.1 regarding access conditions and SMEs) 82 .

6.What are the impacts of the policy options?

This section presents the main impacts of the policy options described in Section 5.2 compared to the baseline scenario, which is no change to the HBERs and Horizontal Guidelines.

The various policy options would primarily affect businesses, which use the rules in their day-to-day operations to self-assess the compatibility of their horizontal agreements with the EU competition rules. Indirectly, the policy options would also affect consumers, who may benefit from lower prices, increased quality and variety of products and services, as well as the results of increased incentives to innovate delivered by competition. The policy options may also impact the environment, as horizontal cooperation in the form of R&D and specialisation agreements can contribute to the Sustainable Development Goals 83 . Finally, also NCAs and national courts would be affected, as the HBERs are binding on them and they typically take into account the Horizontal Guidelines in their enforcement practice.

The following sub-sections therefore cover the assessment of impacts on: competition; the internal market; businesses (including SMEs); consumers; enforcement authorities (i.e. the Commission, NCAs and national courts) and the environment. The evidence gathered during the impact assessment, notably the feedback from the stakeholders and NCAs, indicates that the policy options would have limited or no impact on social issues and fundamental rights. These areas are therefore not further assessed.

The assessment of the impacts of the policy options is subject to limitations, which are similar to the limitations faced during the evaluation of the current rules. For example, as regards the quantification of the costs and benefits, in view of the evidence obtained, it was not possible to quantify the costs and benefits of the policy options identified 84 .

This is related to the difficulty in quantifying the costs and benefits of the HBERs, together with the Horizontal Guidelines, which had already become apparent during the evaluation of the HBERs. The evaluation showed that businesses seem to assess the costs they incur to ensure compliance of their business operations with competition law at a general level, but without distinguishing between the type of agreement concerned or the instrument relied on for the purposes of their self-assessment 85 .

The present impact assessment thus relies almost exclusively on qualitative evidence and especially on the feedback of stakeholders and NCAs obtained in the course of several consultations (see in particular Annexes 1 and 2 of this report). In addition, the impact assessment relies on the enforcement experience of the Commission and NCAs, as well as on the results of the expert reports commissioned during the impact assessment.

The feedback of businesses and NCAs is of particular importance, since companies that use the rules to self-assess the compliance of their horizontal agreements with Article 101 of the Treaty and enforcement authorities are the primary users of the HBERs and Horizontal Guidelines. They are thus the ones who have relevant practical experience on the impacts of the rules. In general, particular weight was given to the views of the NCAs, as they have developed informed views on the application of Article 101(3) of the Treaty, through their enforcement work.

In the assessment of the stakeholder feedback, due account was also taken of the fact that this feedback may not always have been representative 86 . The present report also attempts to highlight the views of under-represented categories of stakeholders, such as consumers 87 . Overall, but especially where there were diverging opinions, the assessment paid particular attention to the arguments raised and whether these were, for example, sector-specific. As the HBERs apply across all sectors, more weight was given to arguments that are relevant across the board, rather than those which were sector-specific. As explained in more detail below, for each area of the rules, the assessment gave particular weight to the stakeholder views that were consistent with other evidence (the evaluation, expert reports). In addition, the assessment considers the impacts of possible adjustments to the policy options to address certain diverging views.

6.1.Impact of the options identified to facilitate the application of the HBERs by SMEs

6.1.1.Impact on competition

SMEs may be active in nearly all markets and nearly all sectors of the economy. The forms of SMEs are therefore equally diverse, ranging from single proprietorship to a firm with a hundred employees or an internationally known successful and leading speciality supplier serving a niche market 88 . Given the differences between sectors, it is however difficult to identify the typical SME from a competition law perspective 89 .

The results of the open public consultation generally considered that the policy options proposed regarding SMEs would encourage the participation of SMEs in R&D and Specialisation agreements (see Annex 2, section 3.2). However, for Options 1 and 2 the number of replies to the open public consultation were quite limited 90 and vague (for example, in in terms of the conditions for the exemption); hence, a workshop was organised to obtain more clarity on the proposed policy options. The outcome of the workshop was that the participating stakeholders considered that both Option 1 and Option 2 (changing the conditions of the R&D BER relating to access to results) were unlikely to solve the problem and could result in the exemption of agreements that might harm competition.

Option 1 (introducing a specific exemption for SMEs in the HBERs) would bring some benefits and several disadvantages. Defining criteria for the purpose of introducing a specific exemption for agreements concluded by SMEs is challenging. Absolute parameters, such as turnover figures or number of employees, such as those used in the definition of SMEs, do not reflect differences in the size of the relevant market(s) or the power of the companies in those market. For example, a firm with an annual turnover of EUR 50 million may be small and not have market power in a market where certain other firms have sales in the billion euros range. However, in other markets, with a different competitive structure and size, a firm having the same turnover figures may have market power despite falling within the definition of a SME as its turnover could instead represent (a large share of) the entire market.

Therefore, the HBERs would need to contain additional conditions to avoid the risk of block-exempting agreements which may harm competition, in addition to the existing SME definition. These conditions might include the presence of a minimum number of competitors in the market following the conclusion of the R&D agreement, or, in the case of the Specialisation BER, the size of the total product market covered by the agreement and the forecast sales/revenues derived from the sale of the specialisation products 91 . For SMEs, it is likely that applying such new conditions would to some extent replicate the complexity of applying the current market share thresholds criticised by SMEs during the evaluation; in addition, SMEs would also need to adjust to the new conditions. For this reason, this option can be expected to have a neutral or more likely a negative impact on competition.

Option 2 (in the R&D BER, limiting or removing the conditions to access to (i) the results of joint R&D and to (ii) pre-existing know-how). These access conditions require the former R&D partners to provide full access to the results of the joint R&D to all the parties of the agreement and to provide access to any pre-existing know-how that is indispensable to allow the other partners to carry out such exploitation. While the access conditions may cause some firms to refrain from entering into R&D cooperation agreements, both the access conditions benefit SMEs – and other parties involved in R&D agreements - by ensuring their ability to compete on the market after the exemption provided by the R&D BER has expired 92 . Indeed, the aim of the access conditions is to ensure that companies, including SMEs, are able to continue with the exploitation of the results of the joint R&D on their own, or even change industrial or financial partners, after the R&D agreement has ended.

Moreover, since the adoption of the first R&D BER, it appears that access conditions are now commonly included in R&D agreements. However, the R&D BER remains relevant as it continues to provide a minimum threshold for the access rights that the parties should grant to each other in the context of an R&D agreement. According to an expert report on R&D and SMEs, some smaller firms centred around universities use model R&D cooperation agreements that are common when public funding is obtained and from which they generally do not deviate 93 . These model contracts often stipulate broader access rights than those that are required by the R&D BER, including access to final R&D results (so called ‘foreground access rights’) and to pre-existing proprietary information (so-called ‘background intellectual property rights’). Moreover, foreground access rights have become an important source of income and SMEs may gain additional revenues (in the form of royalties) from the exploitation of the final R&D results through licensing. For these reasons, limiting or removing the conditions in the R&D BER relating to access to the final R&D results and to pre-existing know-how is likely to have a neutral or possibly negative impact on competition.

Option 3, whereby the definition of unilateral specialisation agreements in the Specialisation BER would be extended to include agreements involving more than two parties, would recognise the economic reality that it is sometimes necessary for companies to cooperate with more than one other party in order to achieve sufficient economies of scale to be competitive 94 . Expanding the scope of the Specialisation BER in this way would have a positive impact on competition in the market, by encouraging new combinations of companies to enter into this efficiency-enhancing form of cooperation, whilst maintaining the same safeguard against harmful effects, in the form of the combined market share threshold of 20%.

Besides the policy options, it was also considered whether to introduce further guidance for SMEs in the Horizontal Guidelines (see Section 5.2.1 above). In this regard, the introduction of explicit references to the De Minimis Notice and the Effect on Trade Notice is particularly relevant to SMEs, because these Notices include market share thresholds or rather ceilings, which agreements between SMEs (and some agreements between SMEs and large companies) are likely to meet and that exclude these agreements from the application of Article 101 of the Treaty. Therefore, the introduction of additional references to the these two Notices in the Horizontal Guidelines would also have a positive impact on competition.

6.1.2.Impact on the internal market

As acknowledged in the SME strategy adopted in March 2020 95 , European SMEs experience legislation as complex and burdensome. SMEs are in particular affected by the compliance costs (administrative and legal) created by legislation, given their limited human and financial resources.

R&D agreements with other SMEs or with large firms may provide SMEs with access to funding, knowledge and other necessary resources. Specialisation agreements are also of particular relevance to SMEs, as cooperation in manufacturing products or preparing services, subcontracting products in whole or in part, or joining forces to bid for contracts is often essential for SMEs to survive in the market. In recent years, the trend towards increased cooperation between market players has been enriched through ever more complex schemes, ranging from logistics cooperation leading to just-in-time inventory management efficiencies, technological cooperation leading to standard-based ecosystems and a myriad of other bilateral or increasingly multilateral formats. These types of cooperation are especially important for SMEs, facilitating market entry and reducing risks that SMEs may be less able to counter than their larger rivals 96 .

Option 1 can be expected to have only a very limited impact on the internal market. Even if SMEs may have difficulties reaching this conclusion, cooperation agreements involving SMEs often either fall within the safe harbour provided by the De Minimis Notice, have no, or no appreciable, effect on trade pursuant to the Notice on Effect on Trade, or they fall within the respective market share thresholds for R&D (25%) and specialisation (20%) agreements in the HBERs. Therefore, the introduction of a specific exemption for SMEs in the R&D BER is unlikely to significantly increase the total number of agreements that can be exempted from the application of Article 101 of the Treaty.

Limiting or removing the conditions of the R&D BER relating to access to the results of joint R&D, in line with Option 2, may potentially restrict growth for SMEs in the Union, namely a negative impact on the internal market, since R&D-focused SMEs often earn revenue from royalty streams derived from the exploitation of foreground intellectual property rights obtained through the application of the R&D BER (see Section 6.1.1 above).

Expanding the scope of the Specialisation BER in line with Option 3 would bring benefits to the internal market, as the block exemption would then cover more agreements and this would adapt the Specialisation BER to the current needs of the market without jeopardising competition. The negative impacts on the internal market, if any, would be limited, as the combined market share threshold of 20% would not change.

6.1.3.Impact on businesses

All three options provided are envisaged to facilitate the application of the HBERs by SMEs.

The introduction of an explicit exemption for SMEs, under Option 1 could, at first sight, provide more legal certainty for SMEs wishing to enter into R&D and specialisation agreements. However, as set out above in Section 6.1.1, the inclusion of an exemption specifically for SMEs would have to be accompanied by additional provisions to ensure that only agreements that do not harm competition are block-exempted. The introduction of such additional provisions would impose an additional administrative burden on SMEs and other businesses and is likely to reduce legal certainty compared to the baseline option. Moreover, even if they were to benefit from a specific exemption, SMEs would still have to ensure that their agreements comply with the other conditions of the HBERs (for example that they do not include hardcore or excluded restrictions). In short, any additional legal certainty that a specific exemption could provide to SMEs would not go as far as allowing them to set aside the HBERs and Horizontal Guidelines or refrain from applying them when they self-assess their cooperation agreements. For these reasons, Option 1 can be expected to have a neutral or negative impact on businesses.

Option 2, whereby the access conditions under the R&D BER would be limited or removed, could have a large impact on businesses. Removing this as a condition for the exemption would not seem to have a significant effect on the contractual configuration of R&D projects since stakeholders have reported that these access rights are commonly applied the requirement of providing full access to the results. Notably the requirement of providing full access to the results is seen as a reciprocal compensation of the respective interventions of parties in an R&D agreement 97 . However, while limiting or removing these access rights may encourage the participation of some companies in R&D agreements, it may also limit the ability of certain companies (in particular SMEs) to remain in the market (e.g. since they will no longer have access to the final results or to the necessary know-how) and could jeopardise a source of revenues (royalties) for SMEs. Therefore, Option 2 would have a neutral impact on businesses.

Changing the Specialisation BER in line with Option 3 would have a positive impact on businesses. All businesses relying on the exemption of the Specialisation BER would obtain more legal certainty if they are sure that unilateral specialisation agreements with more than two parties are also covered by the block exemption. This ensures that the exemption for this type of agreements is in line with the exemption for reciprocal specialisation agreements and joint production agreements and should stimulate pro-competitive horizontal cooperation.

6.1.4.Impact on consumers

Consumers are not directly affected by the HBERs, as they concern agreements between undertakings. Nonetheless, the Commission may only adopt block exemption regulations for categories of agreements that generally meet the four conditions of Article 101(3) of the Treaty, including the condition that consumers receive a fair share of the benefit of the efficiencies generated by the agreement. It is therefore in the interest of consumers that this consumer benefit condition is taken into account in any adjustment of the scope of the HBERs’ safe harbours. Moreover, it is important that the benefit of the HBERs should only be granted to cooperation agreements (i) between companies that do not have market power; (ii) which fulfil the conditions for exemption; and which (iii) do not include hardcore restrictions.

Provided these conditions are met, the impact of the options on consumers will be the same as the impact on competition. Accordingly, Options 1 and 2 can be expected to have a neutral or possibly negative impact on consumers, whereas Option 3 is likely to have a positive impact.

6.1.5.Impact on enforcement authorities

As companies must self-assess the compliance of their agreements with Article 101 of the Treaty, the Commission and NCAs generally only deal with R&D and specialisation agreements that raise competition concerns and have been identified ex-officio by the competition authorities or have been brought to their attention, for example, through a complaint. Under the current rules, in order to intervene against agreements that are covered by a block exemption, competition authorities have to withdraw the benefit of the exemption in accordance with the conditions laid down in Article 29 of Regulation 1/2003. Neither the Commission nor the NCAs have ever done this for the HBERs.

For NCAs, it is important that the HBERs provide as much legal certainty as possible, given that they are bound by the HBERs in their enforcement practice. In their replies to the open public consultation and on the consultation of the draft texts, NCAs did not express a clear preference for any of the three options. They have however commented positively on the Commission’s proposals to improve and expand the guidance on the application of the HBERs. Accordingly, all Options can be expected to have a neutral or possibly positive impact on enforcement authorities in as far as they bring legal certainty to businesses, thereby reducing the need for intervention by the enforcement authorities.

6.1.6.Impact on the environment

Policy options such as Options 1 and 2, which encourage the participation of companies, including SMEs in R&D and/or Specialisation agreements, could have a positive impact on the environment. R&D cooperation agreements may provide SMEs with access to funding, knowledge and other necessary resources to develop solutions that would benefit the environment. Specialisation agreements are also of particular relevance to SMEs, as cooperation in buying and selling products or services, subcontracting the production of goods in whole or in part or joining forces to bid for given contracts is often essential for SMEs to survive in the markets and may benefit the environment by saving resources (such as water and electricity) and/or reducing pollution (e.g. by not duplicating production plants).

Option 3 in particular will have a positive impact on the environment, as it would allow companies more flexibility to enter into specialisation agreements that may be particularly relevant for attaining the Green Deal objectives.

For example, three companies could enter into a unilateral specialisation agreement for the production of solar panels, whereby one of them would produce the solar panels and the other two would cease or limit their production and would instead purchase the solar panels from their co-contractor. This may be particularly interesting if this would guarantee that the company producing could expand its production capacity and/or have a better capacity utilisation rate and/or decrease its production costs, hence making a more efficient use of natural resources and reducing the CO2 footprint of the production activities, compared to a scenario in which the three companies were each producing individually.

6.2.Impact of the options for the treatment of R&D agreements for which it is not possible to calculate market shares at the time the agreement is entered into

6.2.1.Impact on competition

There are 401 EU companies (including six SMEs) amongst the top 2500 R&D investors in the world and they invested EUR 184.1bn in R&D in 2020 98 . EU companies are leaders in R&D investments for example in automobiles and transportation as well as in aerospace and defence. Other important R&D investment areas for the EU include the health industries (pharma, biotech and health equipment) and ICT production (which includes for instance computer hardware; electrical components & equipment; electronic equipment; semiconductors or telecommunications equipment). R&D efforts can lead to the creation of entirely new products or technologies in all these sectors but also in sectors in which EU companies are not in leading positions and which could contribute to the digital and green transitions in the EU.

This can happen, for example, in the context of R&D efforts specifically directed towards the creation of such new products or technologies (for example the creation of a new vaccine to target a recently emerged virus) or in the context of R&D efforts directed towards an objective that cannot yet be defined in terms of a specific product or technology (sometimes called R&D poles, for example researching mRNA technology 99 that could be used in a number of different vaccines or treatments). Maintaining competition at innovation level contributes to ensuring product competition if the R&D efforts are successful. Protecting innovation competition should therefore be a key goal of competition policy 100 .

The two policy options concern the treatment under the R&D BER of R&D agreements for which it is not possible to calculate market shares at the time the agreement is entered into. Changing the scope of the safe harbour can impact competition in two ways. First, narrowing the scope of the safe harbour may deter companies from entering into certain R&D agreements relative to the baseline 101 . This can be expected to have a positive impact on competition where those agreements do not meet the conditions of Article 101(3) of the Treaty, namely where the agreement would produce net anti-competitive effects. On the other hand, narrowing the scope of the safe harbour can be expected to negatively impact competition where it deters companies from entering into agreements that meet the conditions of Article 101(3) of the Treaty, namely where objective efficiencies resulting from the agreement outweigh any restrictive effects. In particular, where companies are deterred from entering into R&D agreements that meet the conditions of Article 101(3) of the Treaty, innovation is likely to occur less quickly or to a lesser extent than would otherwise have been the case.

Option 1 (making the block exemption of R&D agreements for which it is not possible to calculate market shares subject to a three competitor rule) would, in theory, strengthen the protection of innovation competition relative to the baseline. However, the stakeholder feedback indicates that it is difficult to design conditions that are simple for companies to apply and that are proportionate. In particular, regarding the proposed 3+ rule, stakeholders (including businesses that participate in R&D agreements and specialist law firms) indicated that it is generally not possible for companies to assess the scope and timing of rival R&D efforts with sufficient certainty, as companies generally keep their R&D efforts secret.

Stakeholders also questioned the proportionality of the proposed new threshold, firstly on the grounds that it would penalise the first companies to engage in a new area of R&D (these companies would have difficulty in identifying comparable third party R&D efforts) and secondly because it would make self-assessment more burdensome for this category of R&D agreements than for R&D agreements that relate to the improvement or replacement of existing products or technologies (where the parties simply have to calculate their own market shares). Stakeholders considered this to be disproportionate, since outcomes (in terms of marketable products) are generally less certain for R&D projects that do not relate to existing products or technologies or that concern early stages of the innovation process, and therefore cooperation agreements relating to such projects are generally less likely to produce anti-competitive effects. In this respect, stakeholders pointed to the absence of any infringement decisions or judgments relating to this category of R&D agreements and argued that the existing possibility for competition authorities to withdraw the benefit of the block exemption in individual cases already provides an adequate means to address cases where this category of R&D agreements produce anti-competitive effects 102 .

In view of this feedback and the lack of antitrust enforcement experience in relation to R&D agreements for which it is not possible to calculate market shares, it appears that the introduction of a three competitors rule would impose a disproportionate administrative and compliance burden on companies and would reduce legal certainty. With regard to the impact on innovation competition, it is likely to deter companies from entering into anti-competitive R&D agreements but also deter them from entering into pro-competitive R&D agreements. This higher burden for companies, the reduction in legal certainty and the potential chilling effect on pro-competitive R&D agreements would make this option disproportionate relative to any positive impact on innovation competition. This option would therefore have a neutral or negative impact on competition.

Option 2 would maintain the existing block exemption for R&D agreements for which it is not possible to calculate market shares but would introduce a new provision in the R&D BER referring to the power of the Commission and NCAs to withdraw the benefit of the block exemption in individual cases where the conditions of Article 101(3) of the Treaty are not met, in particular where the agreement eliminates effective innovation competition. This provision, together with additional explanations and examples in the Horizontal Guidelines would alert companies wishing to enter into this category of R&D agreements that the Commission and NCAs would take into account the competitive dynamic at R&D level for the assessment of these agreements in order to determine whether to withdraw the benefit of the exemption. This option would increase the protection of innovation competition relative to the baseline, while not reducing legal certainty or deterring companies from entering into pro-competitive R&D agreements. This option, the effect of which would be to alert companies to the possibility that their cooperation might lead to an intervention by competition authorities, notwithstanding the application of the R&D BER, would be a proportionate response to the risk that horizontal R&D cooperation agreements may harm innovation competition in certain cases. Option 2 would therefore have a positive impact on competition.

6.2.2.Impact on the internal market

Protecting innovation competition and maximising legal certainty for companies that engage in joint R&D is essential for a well-functioning internal market. R&D collaborations can enable companies to develop and commercialise new products and technologies more quickly, resulting in more choice for EU consumers. Article 179(1) of the Treaty raised to the level of a Union objective the strengthening of the Union’s scientific and technological bases and the achievement of a European research area, in which researchers, scientific knowledge and technology can circulate freely.

It is undisputed that R&D plays a key role in fostering growth and productivity and enhancing competitiveness. With its ability to drive growth, to create up to 320,000 new highly skilled jobs by 2040 and to leverage approximately 11 euro of additional investments for each euro invested at the European level, the R&D activity is an engine of the green and digital transitions in Europe.

In theory, Option 1 would strengthen the protection of innovation competition by introducing the three competitor rule for R&D agreements for which it is not possible to calculate market shares at the time the agreement is entered into. However, based on the stakeholder feedback referred to in section 6.2.1, it appears that, in practice, it is difficult to devise conditions that are simple for companies to apply, with the result that this option would impose a heavy administrative and compliance burden on companies and would reduce legal certainty, which may deter some companies from entering into pro-competitive R&D agreements. Stakeholders therefore considered that Option 1 would create a new barrier to innovation in the internal market 103 . For these reasons, the potential chilling effect of Option 1 on the conclusion of R&D agreements would be disproportionate relative to any positive impact on innovation competition. This option would therefore have a neutral or negative impact on the internal market.

Option 2 would maintain the current high level of legal certainty for companies envisaging R&D agreements for which it is not possible to calculate market shares at the time the agreement is entered into (such agreements would continue to benefit from the safe harbour, subject to the other conditions for exemption, the hardcore list and the excluded list of the current R&D BER). However, this option would nonetheless increase the protection of competition relative to the baseline, by raising companies’ awareness of the scenarios in which the benefit of the block exemption may be withdrawn. By striking the right balance between the two objectives of protecting innovation competition and providing legal certainty, this option would have a positive impact on the internal market.

6.2.3.Impact on businesses

The stakeholder feedback to the public consultation on the draft revised R&D BER and the Horizontal Guidelines indicate that the primary concern of businesses is that the revised rules should provide legal certainty and minimise the burden of self-assessment 104 . Nonetheless, rules that do not sufficiently protect innovation competition may also adversely impact businesses, both in their capacity as competitors in innovation and in their capacity as buyers (consumers) of the new products and technologies that result from innovation.

As already indicated, Option 1 would, in theory, increase the protection of innovation competition, however, based on the results of the impact assessment, this would come at the expense of more complex self-assessments and less legal certainty for businesses envisaging R&D collaborations for which market shares cannot be calculated at the time when the agreement is entered into.

Under this option, such businesses would notably have to assess the scope and timing of comparable third party R&D efforts, which may be located outside the EU. As a result, it appears that the assessment of whether this category of R&D agreement complies with the three competitor rule would be more complex than the assessment for other types of R&D agreements. Stakeholders considered that this higher compliance burden would be disproportionate, given that the outcome of R&D projects that are not linked to the improvement, replacement or substitution of existing products or technologies or that concern the early stages of the innovation process, is generally less certain than for other R&D, for example R&D relating to existing products. Relative to the baseline, this additional compliance burden could deter businesses from entering into pro-competitive R&D agreements. On balance, this option would therefore have a negative impact on businesses.

Option 2 would maintain within the safe harbour R&D agreements for which it is not possible to calculate market shares at the time the agreement is entered into, without introducing the three competitor rule and as long as the other conditions of the R&D BER are met (e.g. access conditions, absence of hardcore conditions). This option would therefore maintain the current level of legal certainty for this category of R&D agreements 105 . This option would also maintain the current relatively simple self-assessment process for this category of R&D agreements. However, by introducing a new provision in the R&D BER referring to the power of the Commission and NCAs to withdraw the exemption in individual cases, and by providing more guidance in the Horizontal Guidelines on the scenarios in which that power is likely to be used, this option would raise awareness of the competition concern outlined in Section 2.1.2 (problem definition), namely that in certain scenarios this category of R&D agreements may lead to a reduction in levels of innovation.

These awareness-raising provisions can be expected to impact businesses in two ways: first, businesses envisaging entering into this category of R&D agreements are more likely to be deterred from doing so in the problematic scenarios referred to in the Horizontal Guidelines, in particular where there are a small number of remaining comparable third-party R&D efforts. Second, businesses that consider that their competitors or suppliers are collaborating in a manner which harms competition at the R&D level are more likely to raise their concerns with enforcement authorities, thereby bringing problematic R&D agreements to the attention of the authorities. The authority will then be in position to investigate the concerns and, where appropriate, withdraw the benefit of the block exemption and prohibit the agreement. This option would therefore have a positive impact on businesses, both those that wish to enter into this category of R&D agreements and those that may be exposed to harmful effects from such agreements.

6.2.4.Impact on consumers

The two policy options would not impact consumers directly, as the R&D BER does not apply to agreements with consumers. However, consumers generally benefit from innovation competition, in the form of increased choice and quality of products. Therefore, the two policy options can be expected to impact consumers in the same way that they impact competition, namely the potential chilling effect of Option 1 on the conclusion of R&D agreements for which it is not possible to calculate market shares at the time the agreement is entered into would be disproportionate relative to any positive impact on innovation competition and consequently also on consumers, whereas Option 2 would have a positive impact on consumers by increasing the protection of competition for this type of R&D cooperation.

6.2.5.Impact on enforcement authorities

Both Option 1 - which would introduce the new three competitor rule for the exemption of R&D agreements for which it is not possible to calculate market shares – and Option 2 – which would introduce an explicit reference in the R&D BER to the power of competition authorities to withdraw the exemption – would ensure a consistent approach to the protection of effective innovation competition within the EU and would enhance consistency with the current rules applied in other jurisdictions (namely the U.S.A.), by raising awareness that R&D agreements for which it is not possible to calculate market shares at the time the agreement is entered into may, in certain circumstances, restrict innovation competition and fail to meet the conditions of Article 101(3) of the Treaty.

Under the current rules, in order to enforce Article 101 of the Treaty against agreements that benefit from a block exemption, competition authorities have to adopt a decision withdrawing the benefit of the block exemption. To do so, they must reach the conclusion that the agreement restricts competition within the meaning of Article 101(1) of the Treaty and that it fails to meet one or more of the conditions of Article 101(3) of the Treaty. Neither the Commission nor the NCAs have ever done this for the R&D BER or the Specialisation BER. In addition, for NCAs, withdrawing the benefit of a BER is more difficult in practice than for the Commission, notably because of the conditions to be fulfilled under Article 29(2) of Regulation 1/2003, which provides that an NCA may only withdraw the benefit of a block exemption in respect of the territory of its Member State, or in a part thereof, which has all the characteristics of a distinct geographic market.

In this context, Option 1 - which would introduce the new three competitor rule for the exemption of R&D agreements for which it is not possible to calculate market shares at the time the agreement is entered into - should have a positive impact on enforcement authorities, compared to the baseline, because it would allow the Commission and NCAs to prohibit anti-competitive R&D agreements that do not meet the new rules, without first having to withdraw the benefit of the R&D BER. Compared to the baseline, Option 2 would have a neutral impact on the administrative burden of competition authorities, however it would have a positive deterrent impact in terms of raising awareness of the importance of innovation competition and of the potential for R&D agreements for which it is not possible to calculate market shares to harm innovation competition in certain scenarios.

6.2.6.Impact on the environment

The Commission’s EU Industrial R&D Investment Scoreboard of 2021 reports on companies’ R&D investments in 2020. It shows the strong position of the EU in developing green technology in energy-intensive industries and that top R&D investing companies are increasingly focusing their R&D efforts on technologies that will contribute to achieving the green transition with EU companies among the leaders 106 . The report includes a patent analysis on green inventions addressing the production or processing of goods for eight Energy Intensive Industries (EII), Cement, Ceramics, Chemicals, Fertiliser, Glass, Lime, Oil-Refining and Steel over 2010-2018. The results show a steady growth of green patents over the considered period with the EU showing the highest specialisation index (amount of green patents as a share of total patents within the region’s portfolio). In addition, the practices of the top R&D investors as regards the sustainable development goals (‘SDGs’) have improved over the period 2016-2020, with EU companies having a comparative advantage in the energy and chemicals sectors. There is also a clear association between attention to SDGs and R&D investment for top R&D investors in energy-intensive industries, particularly with respect to SDG 7 (affordable and clean energy), SDG 8 (decent work and economic growth) and SDG 9 (industry, innovation and infrastructure).

Increasing the protection of competition at innovation level is likely to have a positive impact on the environment. To the extent that Option 1 is likely to deter companies from entering into pro-competitive R&D agreements, it is likely to have a neutral or negative impact on the environment. In particular, it might create delays and inefficiencies in bringing to the market new products or technologies that would help accelerate the Green transition. By increasing the protection of innovation competition relative to the baseline, Option 2 would have a positive impact on the environment.

7.How do the options compare?

This section compares the different policy options between themselves and against the baseline scenario as regards their effectiveness, efficiency and coherence, and concludes on the preferred option for each area, also in view of their impact.

In order to compare the effectiveness of the different policy options, the Commission assesses their ability to achieve the specific objectives of the HBERs, namely:

I.to ensure the effective protection of competition;

II.to provide adequate legal certainty for undertakings regarding horizontal cooperation agreements; and

III.to simplify administrative supervision by public authorities.

All three objectives are important in the assessment of the options. Ensuring the effective protection of competition enables the proper functioning of the European internal market for the well-being of consumers, businesses and society as a whole. Legal certainty is also of great importance for the effectiveness of the policy options, since, without it, the HBERs lose much of their usefulness for stakeholders. The simpler and clearer the rules, the easier they will be to apply and the more they will help businesses to self-assess their horizontal cooperation agreements.

Simplifying the self-assessment of horizontal cooperation agreements by businesses and the supervision of horizontal cooperation agreements by the Commission, NCAs and national courts is also important, since the consistent application across the EU of the competition rules regarding R&D agreements and specialisation agreements contributes to ensuring that businesses operating across the EU benefit from a level playing field, which in turn contributes to the proper functioning and enhancement of the European internal market.

The assessment of efficiency takes into account how the policy options will affect the costs incurred by businesses to verify whether their agreements comply with Article 101 of the Treaty, and how those costs compare to the benefits of the rules. These costs usually include fees for external consultants (lawyers and economists), as well as the cost of internal legal advice and the time spent by commercial teams to negotiate and review contractual documents.

As regards coherence, the policy options need to be assessed in the light of other Commission rules and guidance on the application of Article 101 of the Treaty and other EU legislation with relevance for competition and beyond.

7.1.Options to facilitate the application of the HBERs by SMEs

7.1.1.Effectiveness

Compared to the baseline, Option 1 (introducing a specific exemption for SMEs in the HBERs), as set out in Section 5.2.1 above, could ensure the effective protection of competition if an additional legal test is introduced (further detail is provided in Section 5.2.1 above, e.g. defining the criteria to exempt agreements concluded by SMEs) to ensure that the R&D and specialisation agreements involving SMEs that are exempted have no negative impact on competition. The introduction of such additional provisions would impose an additional administrative burden on SMEs and other businesses and is likely to reduce legal certainty compared to the baseline option. Moreover, these additional provisions would not simplify the administrative supervision by public authorities.

Moreover, even if Option 1 could make the application of the rules simpler for SMEs in the long-term, the effectiveness of this policy option may be limited, given that R&D and specialisation agreements between SMEs are in many cases likely to be covered by the De Minimis Notice; to fall within the market share threshold in the R&D BER (25%) or the Specialisation BER (20%), or to have no effect on trade. Therefore, Option 1 is likely to be redundant in many cases.

These considerations also apply to Option 2, as set out in Section 5.2.1 above. While limiting (and/or potentially removing) the condition(s) for exemption in the R&D BER regarding full access to the results and/or to indispensable pre-existing know-how in R&D agreements may increase legal certainty for parties engaged in R&D agreements and may make it easier to cooperate, this option may not meet the requirement of ensuring the effective protection of competition. These conditions protect the ex post competitive status of the parties to the agreement, even if such parties might not have been competitors when entering the collaboration. Limitations to these requirements may therefore impede competition.

Moreover, the removal of the access conditions could facilitate the application of the R&D BER by SMEs (reducing the complexity of the rules); however, the access conditions benefit SMEs – and other parties to R&D agreements – by ensuring that all parties to the agreement are able to compete on the market after the exemption provided by the R&D BER has expired and by providing additional sources of income.

Option 3, as set out in Section 5.2.1 above, concerning the extension of the definition of unilateral specialisation to include more than two parties provides added legal certainty to companies engaging in specialisation agreements, making it easier to conclude these type of agreements in a form that responds to the needs of the market without jeopardising competition. This especially benefits SMEs, as they often rely on specialisation agreements. The fact that the threshold for exemption is not changed ensures that there is no negative impact on competition.

In conclusion, Options 1 and 2 would not involve an immediate simplification of the HBERs and therefore would have a neutral impact in terms of effectiveness. Option 3 broadens the scope of the Specialisation BER using simple and easy to understand language. Therefore, it reduces complexity and does not add administrative formalities compared to the baseline option. Also, it contributes to the simplification of administrative supervision by public authorities.

7.1.2.Efficiency

Compared to the baseline, Options 1 and 2 both involve substantive changes to the HBERs, which, in the short term, will increase compliance costs for businesses engaged in R&D and specialisation agreements. These costs stem from the additional legal advice they are likely to require as the rules change. Even if in the long-term, these compliance costs could decrease, a decrease in legal certainty is likely due to the existence of overlapping rules (e.g. the De Minimis Notice). As set out in Section 5.2.1, the introduction of Option 1 would necessitate some additional criteria to ensure that the relative market position of the SMEs on the market(s) affected is adequately accounted for in the assessment under the competition rules. The costs of obtaining (external) legal advice –the main type of costs involved in applying the HBERs - are likely to impact SMEs more, due to their relatively limited resources. Option 3 is simple and easy to understand and therefore may not entail additional compliance costs.

7.1.3.Coherence

Options 1 and 2 would be inconsistent with other competition policy instruments, for example, the new VBER or the Market Definition Notice, which do not foresee a specific exemption for SMEs, going beyond the safe harbour provided by the De Minimis Notice and the Effect on Trade Notice. Option 3 would be coherent with other EU policy initiatives and instruments to promote horizontal cooperation concluded by SMEs. Also, it would be coherent with other competition policy instruments because it would expand the coverage of agreements by the Specialisation BER (and thus cover also more agreements involving SMEs) without providing for a specific exemption for SMEs.

Objective Option	Effectiveness			Efficiency	Coherence
	Effective protection of competition	Legal certainty for companies	Simplify administrative supervision
Option 1: introduce exemption in both HBERs for agreements between SMEs	0/-	-	0/-	-	-
Option 2: limitation of the full access conditions for exemption in the R&D BER regarding agreements between SMEs	0/-	+	0/-	-	-
Option 3: extend definition of unilateral specialisation in Specialisation BER	+	+	+	+	+

7.2.Options regarding R&D agreements for which it is not possible to calculate market shares at the time the agreement is entered into

7.2.1.Effectiveness

As regards the first effectiveness objective, namely ensuring effective protection of competition, this is achieved where the competition rules (in this case the R&D BER) do not allow companies to collaborate in ways that are incompatible with Article 101 of the Treaty but also do not deter companies from entering into pro-competitive collaborations, namely those that create objective efficiencies which meet the conditions of Article 101(3) of the Treaty. Part of the rationale for the R&D BER is to provide legal certainty for companies that wish to enter into pro-competitive agreements.

Option 1 would impose additional conditions for the block exemption of R&D agreements for which it is not possible to calculate market shares at the time the agreement is entered into. These conditions would relate to the degree of residual competition at the R&D level. In theory, such conditions should improve the protection of innovation competition by ensuring that the R&D BER does not block-exempt agreements that eliminate effective competition at the R&D level. However, the impact assessment indicates that the new conditions would be disproportionate.

First, companies that participate in R&D agreements and law firms that advise on such agreements pointed out that R&D agreements for which it is not possible to calculate market shares at the time the agreement is entered into are generally less likely to produce anti-competitive effects, as outcomes (in terms of marketable products) are generally less certain than for R&D relating to the improvement or replacement of existing products or technologies. In this regard, stakeholders also pointed to the absence of cases in which competition authorities had considered withdrawing the benefit of the block exemption in order to tackle harmful R&D agreements of this type.

Second, the impact assessment highlighted the risk that inserting new conditions in the R&D BER requiring the parties to this category of R&D agreements to demonstrate the existence of comparable third party R&D efforts could deter companies from entering into pro-competitive R&D agreements, by increasing the administrative burden for companies and reducing legal certainty. For these reasons, Option 1 would be more effective than the baseline in ensuring that anti-competitive R&D agreements cannot benefit from the R&D BER safe harbour, but it would not increase the protection of competition overall.

Under Option 2, R&D agreements for which it is not possible to calculate market shares at the time the agreement is entered into would continue to benefit from the safe harbour, without being subject to new conditions. However, a new provision would be inserted in the R&D BER referring to the power of the Commission and NCAs to withdraw the benefit of the block exemption in individual cases, together with guidance in the Horizontal Guidelines highlighting scenarios in which that power is likely to be used. These measures are likely to raise companies’ awareness of the need to take into account the degree of competition at the R&D level when they are considering entering into this category of R&D agreements and to deter them from entering into such agreements in cases where the agreement is likely to eliminate effective innovation competition. Option 2 is expected to raise awareness, not only among the parties to R&D agreements but also among third parties, about the concerns that may arise from R&D cooperation for innovation competition. The consequent risk that cooperating parties may become the target of complaints by third parties to the Commission or the NCAs should help to counter any negative impact resulting from the lack of recent precedents for the withdrawal of block exemption regulations 107 . Option 2 is therefore likely to be more effective than the baseline in ensuring the effective protection of competition.

As regards providing legal certainty for undertakings, Option 1 would be worse than the baseline. In the public consultation, all categories of stakeholders commented that Option 1 would reduce legal certainty, due to the difficulty of obtaining the information required to demonstrate compliance with the new conditions for the exemption of R&D agreements for which it is not possible to calculate market shares at the time the agreement is entered into, namely information on the scope and timing of third party R&D efforts. By contrast, Option 2 – under which this category of R&D agreements would continue to benefit from the block exemption without any new conditions – would maintain the current level of legal certainty for this category of R&D agreements. Moreover, the new provision in the R&D BER referring to the power of the Commission and NCAs to withdraw the block exemption, together with the additional guidance on the scenarios in which that power is likely to be used, would raise awareness of this power and the risks of concluding agreements that eliminate effective competition at the R&D level.

Lastly, Option 1 and Option 2 would be neutral in simplifying the application of competition law to R&D agreements by competition authorities and courts. On the one hand, Option 1 would simplify the task of competition authorities by removing the need for them to withdraw the benefit of the block exemption before tackling certain problematic R&D agreements, but on the other hand, the reduction in legal certainty associated with Option 1 (in particular whether there are sufficient residual third-party R&D efforts) would be likely to complicate the task of enforcement authorities and courts.

7.2.2.Efficiency

Compared to the baseline, Option 1 is likely to increase administrative and compliance costs for companies wishing to enter into R&D agreements for which it is not possible to calculate market shares at the time the agreement is entered into. Under this option, such companies would have to devote time and resources to assessing the scope and timing of third party R&D efforts in the same field, even though in many economic sectors there may be limited or no public information on such efforts. Option 2, which would not introduce new conditions for the exemption of this category of R&D agreements, is not likely to increase administrative or compliance costs for companies. Therefore, Option 1 would be worse than the baseline as regards efficiency, whereas Option 2 would be neutral relative to the baseline.

7.2.3.Coherence

Options 1 and 2 would not affect the coherence of the R&D BER with other Commission rules and guidance on the application of Article 101 of the Treaty, as they do not propose changes that would conflict with such rules and guidance.

As regards coherence with other EU legislation with relevance for competition, both Options ensure coherence with the Commission’s current policy for the enforcement of the EU antitrust and merger control rules, in particular because they take into account the competitive dynamic at innovation level.

Objective Option	Effectiveness			Efficiency	Coherence
	Effective protection of competition	Legal certainty for companies	Simplify administrative supervision
Option 1: New threshold in the R&D BER for R&D agreements for which it is not possible to calculate market shares	+	-	0	-	+
Option 2: New provision in the R&D BER referring to the power of the Commission and NCAs to withdraw the block exemption	+	0	0	0	+

8.Preferred options

8.1.Preferred options identified

8.1.1.To facilitate the application of the HBERs by SMEs

In view of the assessment in Sections 6.1 and 7.1, the preferred option as regards promoting the participation of SMEs in R&D and specialisation agreements is Option 3, combined with the introduction of clarifications in the Horizontal Guidelines. This option comes closest to meeting the objectives of ensuring effective protection of competition and providing adequate legal certainty. The clarifications and the expansion of the scope of the Specialisation BER under Option 3 will also contribute to simplifying administrative supervision by the Commission, NCAs and national courts.

8.1.2.Treatment of R&D agreements for which it is not possible to calculate market shares at the time the agreement is entered into

In view of the assessment in Sections 6.2 and 7.2, the preferred option as regards the treatment of R&D agreements for which it is not possible to calculate market shares at the time the agreement is entered into is Option 2. This option would come closest to meeting the objectives of ensuring effective protection of competition and that of legal certainty, without creating administrative and compliance costs that would be disproportionate to the identified problem.

8.2.REFIT (simplification and improved efficiency)

Compared to the currently applicable HBERs and Horizontal Guidelines, the above-mentioned preferred policy options do not alter the core structure and framework of assessment of the rules. For example, the concepts of market share thresholds and hardcore restrictions and, in the case of R&D, the exemption of R&D agreements for which it is not possible to calculate market shares at the time the agreement is entered into, including the possibility of withdrawal of the exemption in appropriate cases, are retained. In order to verify whether their agreements can benefit from the safe harbour provided by the HBERs, businesses will therefore still need to perform the same type of assessment as they currently do.

8.3.Application of the ‘one in, one out’ approach

The proposed policy options are not expected to have significant cost implications for businesses and citizens, given that they concern a revision of the current rules, and given that the core structure and framework of assessment provided by the rules will remain the same.

As explained in Section 9 and Annex 3, section 2 of this report, it did not prove possible to quantify the costs and benefits of proposed policy options for businesses or for enforcement authorities and courts.

9.How will actual impacts be monitored and evaluated?

The revised rules are expected to remain in force for 12 years. This will allow the Commission and the NCAs to gather sufficient experience on the functioning of the revised rules, which is necessary to inform decisions on any future changes.

This period of validity also provides sufficient stability for businesses that wish to enter into new R&D or specialisation agreements or to adapt their current agreements to the revised rules, as these changes imply costs for them. In this respect, it should be noted that R&D cooperation agreements last between two and four years on average and that, where the parties exploit the R&D results jointly, the block exemption continues to apply for a further seven years from the date the contract products are first put on the market within the EU. The 12-year validity period would therefore be proportionate and would provide legal certainty to undertakings that conclude R&D agreements after the revised R&D BER enters into force. Similarly, specialisation agreements may involve investments in the creation of new production facilities and/or improvements or re-purposing of existing facilities, which may require several years.

During the proposed 12-year validity period, the Commission will monitor on an ongoing basis how the revised rules are functioning and whether they achieve the policy objectives identified in this Impact Assessment. As set out in more detail below, the Commission will rely for this purpose on its own enforcement practice (the pursuit of ex officio cases and formal and informal complaints); its supervision and coordination of NCAs’ case practice; monitoring of cases before national courts, and informal contacts with stakeholders.

The enforcement experience of the NCAs is of particular importance, as they are the primary enforcers in relation to horizontal cooperation agreements 108 . The Commission regularly exchanges experience and information with the NCAs about the enforcement of the EU antitrust rules in the context of the European Competition Network. The Commission and the NCAs discuss the application of Article 101 of the Treaty, the HBERs and the Horizontal Guidelines in relation to real cases in a dedicated Working Group on horizontal agreements, which meets at least twice per year. In addition, the Commission discusses cases involving horizontal agreements bilaterally with NCAs. Article 11 of Regulation 1/2003 provides for various exchanges of information between ECN authorities, including the obligation to inform other authorities about the opening of an investigation and the obligation for NCAs to consult the Commission on any decision that they propose to adopt under Article 101 of the Treaty. These well-established mechanisms will allow the Commission to collect, regularly and systematically, information on the functioning of the revised HBERs and Horizontal Guidelines. They will also enable the Commission to understand whether the revised rules achieve the specific objective of simplifying administrative supervision.

Similarly, the Commission will monitor national court proceedings relating to horizontal agreements 109 , paying particular attention to any requests to the CJEU for preliminary rulings. Such requests are usually made regarding areas where the national courts find there is insufficient guidance on how to apply the rules. The number of such requests will be an important indicator of whether the rules are sufficiently clear and whether there are any gaps.

Finally, the Commission will also continue to engage directly with stakeholders, e.g. via informal discussions, in order to understand any difficulties encountered by businesses when applying the revised rules and whether the rules provide an appropriate level of legal certainty. The number of requests for clarification and guidance will also be an important indicator of whether the rules provide sufficient legal certainty for stakeholders. In addition, either in reply to these requests or voluntarily, the Commission may also, where warranted, provide additional guidance on more complex areas of the rules, to further enhance the level of legal certainty. For example, where cases give rise to genuine uncertainty because they raise novel or unresolved questions, undertakings can seek informal guidance from the Commission, as set out in the new Notice on Informal Guidance 110 . The Commission may also provide guidance in other forms. In the past, the Commission has published policy briefs or working papers to inform stakeholders about how it interprets particular issues or new case law. Moreover, the Commission’s enforcement practice is also a source of guidance, similar to that provided by the case law of the Union courts.

The above monitoring will be done in a qualitative manner. Throughout the evaluation and impact assessment process it proved to be impossible to quantify the benefits that businesses derive from having a simpler set of rules with which to self-assess their R&D and specialisation agreements, and to quantify the costs that they incur in using these rules (these limitations are further described in Section 2 of Annex 3 of this report and Section 4.4 of the Evaluation SWD). Similarly, it is also difficult to quantify how the rules facilitate the enforcement work of the Commission, the NCAs and the national courts. As a result, it is not possible to provide quantitative monitoring indicators that would allow the Commission to evaluate how these benefits and costs are affected by the revised rules.

It is also difficult to provide quantitative monitoring indicators for the purpose of measuring how the revised HBERs and Horizontal Guidelines achieve their specific objectives, i.e. ensuring the effective protection of competition, providing adequate legal certainty for companies and simplifying administrative supervision. Legal certainty, in particular, is somewhat subjective and may depend on the difficulties that specific stakeholders encounter when applying the rules to their particular field of activity, which adds to the difficulty in measuring it.

No later than June 2031, the Commission will take stock of the functioning of the revised rules and draw up an evaluation report, inter alia on the basis of the information gathered through its ongoing monitoring.

Lastly, it should be noted that Article 2(2) of the Empowerment Regulation provides that a block exemption regulation may be repealed or amended where circumstances have changed. Therefore, in the event of substantial changes in the market, the Commission will have the possibility to adapt the rules to such changes before the expiry of the 12-year validity period.

Annex 1: Procedural information

1.Lead DG, Decide Planning/CWP references

The Directorate-General for Competition of the European Commission (‘DG Competition’) is the lead DG for the review of Commission Regulation (EU) No 1217/2010 of 14 December 2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to certain categories of research and development agreements (‘R&D BER’) and Commission Regulation (EU) No 1218/2010 of 14 December 2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to certain categories of specialisation agreements (‘Specialisation BER’) (together the ‘HBERs’), together with the Guidelines on the applicability of Article 101 of the Treaty on the Functioning of the European Union to horizontal cooperation agreements (‘Horizontal Guidelines’).

The review was registered in the Decide Planning with the reference ‘PLAN/2021/11110, under the headline ambition ‘A Europe fit for the digital age’.

2.Organisation and timing

The impact assessment phase was launched on 6 May2021, following the publication of the Evaluation SWD, which summarised the results of the evaluation of the HBERs and Horizontal Guidelines.

The impact assessment of the HBERs, together with the Horizontal Guidelines, was carried out in close cooperation with other interested Commission services. The inter-service steering group ("ISG") set up for that purpose comprises representatives of Directorates-General AGRI, CLIMA, CNECT, DEFIS, ECFIN, EMPL, ENER, ENV, FISMA, GROW, INTPA, JUST, MOVE, REGIO, SANTE, TRADE, and the JRC as well as the Secretariat-General and the Legal Service, which are associated by default to all such initiatives.

The impact assessment of the HBER, together with the Horizontal Guidelines, was also carried out in close cooperation with the NCAs, which were consulted on the policy options as well as the draft revised rules.

The various milestones of the impact assessment phase are shown in the table below:

Dates	Milestones of the impact assessment phase
6 May 2021	Launch of the impact assessment in the Commission’s Decide Planning
28 May 2021	1st ISG meeting with the following agenda items: - draft IIA and consultation strategy The draft open public consultation was shared with the ISG
7 June 2021	Publication of Inception Impact Assessment (4-week period to comment)
13 July 2021	Publication of online questionnaire (12-week period to comment)
6 December 2021	Upstream meeting with Regulatory Scrutiny Board
17 December 2021	2nd ISSG meeting with the following agenda items: - Overview of revised draft HBERs/Horizontal Guidelines - Update on consultation feedback
1 March 2022	Publication of revised draft HBERs/Horizontal Guidelines with explanatory memorandum (8-week period to comment). Publication of expert reports
1 June 2022	3rd ISSG Meeting with the following agenda items: - Update on feedback to the revised rules - Discussion of draft Impact Assessment report
6 July 2022	Consultation of Regulatory Scrutiny Board
8 July 2022	Negative opinion of Regulatory Scrutiny Board
9 November 2022	4th ISSG consultation on draft revised Impact Assessment Report
30 November 2022	Submission of revised Impact Assessment Report to RSB
6 January 2023	Positive opinion of Regulatory Scrutiny Board

3.Evidence, sources and quality

3.1.Evidence obtained through consultation efforts

DG COMP obtained evidence through the consultation of stakeholders, including through the open public consultation, bilateral meetings with stakeholders and stakeholder workshops. In addition, DG COMP also relied on the evidence from its own investigation activities, its Chief Economist Team and from the experiences of the NCAs.

3.2.Expert reports

DG COMP commissioned expert advice in order to inform the impact assessment of the policy options identified in the impact assessment stage.

The Expert Report by AEDC (Asociación Espanola para la defensa de la competencia) on “Specialisation agreements and SMEs” reviewed the treatment of specialisation agreements under EU competition rules, exploring if and how these rules hinder procompetitive cooperation between SMEs, either among them or with larger undertakings. The report identified potential regulatory inconsistencies which may adversely affect SMEs and highlighted the need for a clear and predictable treatment of horizontal cooperation for these undertakings. The authors proposed alternatives to facilitate that SMEs enjoy the benefits of the Specialisation Block Exemption Regulation and the Horizontal Guidelines while at the same time protecting competition.

The Expert Report by ASTP (a non-profit organisation for technology transfer professionals focusing on the impact of public research on the economy and society) on “DG COMP proposals to amend the R&D Horizontal Block Exemption Regulation: A review on behalf of the publicly funded Research Organisation (PRO) & University sectors” assessed the ability of the proposed policy options to ensure that the rules of the R&D BER and the Horizontal Guidelines do not discourage the participation of research institutes and/or academic bodies in R&D cooperation agreements that do not raise competition concerns. The report welcomed proposals for added clarification in both an updated R&D BER and the Horizontal Guidelines as being necessary, such as around certain temporal and material aspects (including the identification of criteria to determine if a company or an academic body or research institute participating in an R&D project are actual or potential competitors).

The Expert Report by Professor Björn Lundqvist (University of Stockholm, Associate Professor of European Law) on “R&D cooperation agreements concluded by SMEs – Exempted under the EU R&D Block Exemption Regulation?” addressed the issue of whether SMEs should be granted special status under the R&D BER to promote SMEs’ involvement in horizontal R&D cooperation agreements. It highlighted that limiting the regulatory burden for SMEs may encourage SMEs to enter into R&D cooperation agreements. The report therefore discussed three possible tests to identify R&D cooperation agreements between competing SMEs that should be exempted under the R&D BER. The report also considered whether, with regard to SMEs, the exception foreseen in Article 3(2) R&D BER for research institutes and academic bodies (i.e. limitation of the requirement of full access to R&D results) could also be made available to SMEs that are party to R&D cooperation agreements.

4.Consultation of the RSB

Following the meeting of the Regulatory Scrutiny Board (RSB) on 6 July 2022, a revised draft Impact Assessment Report was submitted to the RSB on 30 November 2022. The outcome was a positive opinion, issued on 6 January 2023.

The following table provides information on how the comments made by the RSB at the meeting on 6 July 2022, in the negative opinion of 8 July 2022 and in the positive opinion of 6 January 2023 have been addressed in this report:

Summary of comments	Modifications
(1)The report does not clearly demonstrate that the current rules provide insufficient protection of innovation competition. It does not present evidence that SMEs engage with each other in anti-competitive “pre-market” cooperation.	Section 2 provides clearer reasoning as to why the scope of the current R&D BER might be too wide in certain circumstances. It also provides a clearer explanation of the relevant problem drivers. The lack of concrete evidence of anti-competitive “pre-market” cooperation agreements in the antitrust enforcement practice at EU and Member State level has, amongst other reasons, prompted changes in the assessment of the impacts of the policy options in Section 6 and in the comparison of the options in Section 7. Consequently, the revised Impact Assessment report identifies a different preferred option in the area of innovation competition in Section 8.
(2)The report does not sufficiently define the content of the policy options, including possible combinations. It is not clear under which conditions pre-market cooperation, in particular between SMEs would fall under the competition rules or could benefit from exemptions or a lighter regime or under which conditions the Commission could withdraw the exemption for certain R&D agreements.	Section 5 provides more details on the policy options. It also explains the conditions under which SMEs can benefit from the De Minimis Notice and the Effect on Trade Notice. In addition, it describes the conditions under which the Commission and the NCAs may withdraw the BERs. Finally, it states whether the options can be combined or are alternatives.
(3)The report does not sufficiently assess the impact and proportionality of the policy options concerning new products or specific R&D poles, especially regarding new compliance costs and legal uncertainty for SMEs. It does not assess thoroughly the risk that the new rules may discourage SMEs from engaging in pro-competitive cooperation on pre-market innovation.	The assessment of the impacts of the policy options concerning agreements covering entirely new products or specific R&D poles in Section 6.2 as well as the comparison of the options in Section 7.2 have been changed considerably. Proportionality and possible chilling effects on cooperation have been taken into account. As a result, the revised Impact Assessment report identifies a different preferred option in Section 8.1.2.
Summary of recommendations for improvement	Modifications
(1)The report should provide clear evidence underpinning the identified problems. In particular, it should demonstrate that the current horizontal competition rules insufficiently protected innovation competition and that, in particular, SMEs engaged in significant anticompetitive cooperation for “pre-market” innovation. This analysis should be informed by the antitrust enforcement experience and case law at EU and Member State level as well as views of affected stakeholders.	In the absence of antitrust enforcement experience and case law at EU and Member State level and taking into account the views of stakeholders during the public consultation on the revised drafts as well as a workshop on the R&D BER which took place in September 2022, Sections 2, 5, 6, 7 and 8 have been modified considerably. Consequently, Section 8.1.2 identifies a different preferred option for the treatment of agreements covering entirely new products or R&D poles. New references to the Commission’s merger control and antitrust enforcement practice have been added to Section 2.
(2)The report should clearly define the content of the policy options. For each option, the report should explain the underlying logic and clarify how the option relates to the identified problems. Moreover, the report should clearly state what the option requires from the concerned stakeholders. It should clarify the criteria that businesses should apply for the self-assessment, based on available information, first to assess whether their agreement falls within the remit of competition rules, and second to determine whether they fulfil the conditions for exemption. It should provide clear links to any complementary or more detailed information that will be provided in the accompanying Horizontal Guidelines (or present the relevant parts in annex).	Section 5 defines the policy options more clearly and states what they require from stakeholders. In addition, it provides more detail about the revised content of the accompanying Horizontal Guidelines. In addition, a new Annex 4 provides an overview of the main clarifications and updates in the revised Horizontal Guidelines on a number of other issues that were raised during the evaluation but which did not require substantive changes to the HBERs and were therefore not the subject of distinct policy options.
(3)Regarding the option that exempts SMEs from the application of the horizontal competition rules, the report should define under which verifiable conditions such exemptions would apply. Similarly, for the options on the treatment of R&D agreements on pre-market innovation, new products and specific R&D poles, the report should explain the conditions and procedures under which the Commission could withdraw the benefit of the exemption and how efficiently this could be done. It should also clearly define the changes in the Horizontal Guidelines that are supposed to provide additional assurances to the concerned businesses (in particular on the definition of the “market” and “market power” in the case of new products or technologies where it is not clear from the outset where these will be applied and who the potential users might be).	Section 5.2.1 describes in more detail the Options to facilitate the application of the HBERs by SMEs. In addition, it provides more details about the clarifications that could be included in the Horizontal Guidelines, irrespective of the preferred policy options and in addition to them (including guidance on the De Minimis Notice and the Effect on Trade Notice that are particularly relevant for agreements involving SMEs). Finally, a new Section 5.2.2.1 explains the conditions and procedures under which the Commission could withdraw the benefit of the exemption in a particular case. For agreements relating to the development of entirely new products or R&D poles, the preferred option has now changed, which reduces the need for additional guidance on the definition of the market and market power for such agreements.
(4)The report should assess in greater detail the impact of the policy options on companies, especially on SMEs. It should assess whether SMEs can realistically be assumed to have access to the necessary information for the self-assessment under the new rules, in particular in the area of innovation when third party information is needed. It should assess the risk of unintended consequences, such as reaching out to potential competitors risking disclosing commercially sensitive information. It should identify and quantify the compliance costs and administrative costs for SMEs and assess whether these costs are proportionate to the risks of competition distortions from agreements involving (or concluded between) SMEs. The assessment should also verify stakeholders’ concerns that the new approach could discourage companies from pro-competitive cooperating in innovation.	Sections 6 and 7 have been revised considerably to take into account, amongst other things, the difficulties that parties to R&D agreements may face in accessing information about the R&D activities of third parties, and the consequences of such difficulties in terms of administrative and compliance costs and possible chilling effects on R&D cooperation and innovation, drawing conclusions about proportionality. The revisions to these sections take into account the concerns expressed by stakeholders at a dedicated workshop on 13 September 2022 regarding the proposed new conditions for block-exempting R&D agreements relating to completely new products and R&D poles. The outcome of this workshop is summarised in the new Section 8 of Annex 2. Section 9 and Annex 3, section 2 of the report explain why it was not possible to quantify administrative and compliance costs.
(5)As the problem analysis refers to the complexity of the rules and how this affects SMEs, the report should consider having a clear simplification objective, in particular for SMEs. The impact analysis should assess in how far the proposed policy options meet the simplification objective, and if the proposed measures remain proportionate to the objectives of the initiative.	Sections 4 and 6 of the report have been modified accordingly. Proportionality is now expressly taken into account.
Recommendations for improvement in the positive opinion of 6 January 2023	Modifications
(1)The report should clarify how it draws information from various sources regarding the existence and scale of the problem on competition in innovation. It should better explain how information from merger cases and input from stakeholders (in particular the most recent workshop) is combined to draw the conclusions. In particular, it should clarify to what extent the evidence collected in structural merger cases is directly relevant and useful for the identification and assessment of potential negative effects on competition in innovation resulting from agreements between undertakings. The report should also better highlight the uncertainty surrounding its conclusions.	Section 2.1.2. of the report now explains in more detail the potential negative effects on innovation competition that the Commission has considered in merger precedents. This helps clarify the extent to which such precedents can inform the assessment of potential negative effects on innovation competition arising from cooperation agreements.
(2)For competition in innovation, the report should better explain how the preferred policy option in practice differs from the dynamic baseline. It should better assess whether the threat of withdrawal is credible in the light of past experience and whether it has a deterrence effect.	Sections 6.2.1. and 7.2.1. of the report have been revised to explain the relative importance of Option 2 compared to the baseline and to indicate why the threat of withdrawal remains credible in terms of deterrence despite the lack of withdrawal precedents.

Annex 2: Stakeholder consultation

1.Introduction

This annex presents the results of the consultation activities performed in the context of the impact assessment of the HBERs, together with the Horizontal Guidelines. The various consultation activities consisted of:

·a consultation on the inception impact assessment (“IIA”);

·an open public consultation based on an online questionnaire;

·targeted questionnaires on specific issues;

·a workshop on SMEs in R&D and specialisation agreements

·a consultation of national competition authorities;

·the expert reports (which are mentioned in Annex 1);

·an open public consultation based on a draft revised HBERs and draft revised Horizontal Guidelines, published for comments; and

·a workshop on the revision of the R&D BER.

The different consultation activities mentioned in this annex aimed to gather input from stakeholders on the policy options proposed for the revision of the HBERs and Horizontal Guidelines, as well as on the other proposals made to clarify, update and simplify the HBERs and Horizontal Guidelines.

2.Consultation on the Inception Impact Assessment

The inception impact assessment was published on 7 June 2021. The deadline for stakeholders' feedback expired on 5 July 2021. Fourteen stakeholders gave feedback and their submissions are published on the Better Regulation Website. Among the stakeholders are six business associations, five companies, one citizen, one trade union, and one non-governmental association. In general, the majority of the stakeholders agreed with the Commission that the HBERs and the Horizontal Guidelines are still useful and remain relevant for stakeholders. They also welcomed the Commission’s initiative to review the HBERs and the Horizontal Guidelines, considering in particular the necessity to ensure a full alignment between the various EU policies to support digital transformation in Europe. Four stakeholders commented on the relevance of R&D agreements for contributing to digitisation and the sustainability goals of the ‘Green deal’. Only one stakeholder submitted comments as regards the policy options identified in the inception impact assessment. Four stakeholders focused on the standardisation chapter of the Horizontal Guidelines, where they felt that their interests are currently insufficiently protected. One stakeholder focused on the need to ensure that the revised texts are coherent with other EU policy objectives, notably sustainability.

3.Open Public Consultation and targeted consultations on the basis of an online questionnaire

3.1.Introduction

On 13 July 2021, the Commission launched a public consultation to get more specific feedback, in particular on the impact of the policy options set out in the IIA on various parameters. To this end, it published an online questionnaire which stakeholders were invited to use to provide their experience and views. To gather the widest possible range of comments, the public consultation was open for all stakeholders interested in providing their views on the different areas covered by the online questionnaire. While the online questionnaire was published in English, French and German, participants could reply in any of the 24 official languages of the EU. The deadline for providing such feedback was 5 October 2021.

67 stakeholders provided their feedback via the EU Survey tool. Their replies are available on the Better Regulation webpage. In addition, 4 stakeholders provided replies to the consultation directly to the Commission team.

Among the 67 respondents to the consultation, there are 2 academic and research institutions, 28 company/business organisations, 21 business associations, 3 non-governmental organisations, 2 EU citizens, 1 public authority, 1 trade union, 1 consumer organisation and 1 environmental organisation. Figure 1 below illustrates the types of respondents.

Figure 1. (Q2.1) Respondent type

Of the 67 respondents to the public consultation, 25 have participated in R&D cooperation and 20 have participated in cooperative production/specialisation agreements. With regard to R&D agreements, respondents to the public consultation indicated that, in the last ten years, they are currently a party or they have been a party to the following types of R&D agreements: joint R&D agreements (9 respondents), joint R&D agreements including joint exploitation of R&D results (6 respondents), paid-for R&D agreements (6 respondents), paid-for R&D agreements including joint exploitation of R&D results (5 respondents), joint exploitation of R&D results carried out pursuant to a prior joint R&D agreement (5 respondents) and joint exploitation of R&D results carried out pursuant to a prior paid-for R&D agreement (5 respondents). In addition, 5 respondents indicated that they are currently a party or that they have been a party to other types of R&D agreements in the last ten years.

With regard to specialisation/production agreements, respondents to the public consultation indicated that, in the last ten years, they are currently a party or they have been a party to the following types of specialisation/production agreements: joint production agreements (4 respondents), horizontal subcontracting agreements with a view to expanding production (3 respondents), unilateral specialisation agreements (2 respondents) and reciprocal specialisation agreements (2 respondents). In addition, 4 respondents indicated that they are currently a party or that they have been a party to other types of specialisation/production agreements in the last ten years.

In the questionnaires, DG COMP set out different policy options for the HBERs.

3.2.R&D agreements

The proposed policy options concerning R&D agreements included the following:

I.the potential introduction of a specific category of R&D agreements exempted by the R&D BER, subject to conditions to be defined, in case such agreements were concluded by SMEs;

II.clarifying the definition of competing undertakings in the case where research institutes and/or academic bodies are involved in R&D agreements; and/or

III.limiting (and/or potentially removing) the condition(s) in the R&D BER of full access to the results and/or access to pre-existing know-how in the case where R&D agreements are concluded with SMEs, academic bodies and/or research institutes.

IV.allowing for limitations to the requirement(s) of full access to the results and/or access to pre-existing know–how for all market participants.

The majority of respondents to the open public and the targeted consultation did not provide an answer at all or stated that they do not have an opinion regarding the various questions on the proposed policy options. The summary below sets out the responses of those respondents that expressed a view in the open public consultation. Those respondents that replied in the context of the targeted consultation expressed broadly similar views.

On the introduction of a specific exemption for R&D agreements concluded by SMEs, 10 respondents to the open public consultation generally considered that the introduction of such an exemption would encourage the participation of SMEs in R&D and would have a positive (or very positive) impact on competition in the market (8 respondents), on prices (5 respondents), quality of products/services (9 respondents), on innovation / investment in R&D (9 respondents), on the self-assessment of horizontal R&D agreements (9 respondents), on cooperation by SMEs in R&D (10 respondents), on costs for the organisation (6 respondents), on legal certainty (8 respondents) and on harmonised application of competition rules by national competition authorities and national courts (6 respondents). Two respondents had a negative opinion regarding the introduction of a specific exemption for R&D agreements concluded by SMEs.

On the limitation (and/or potential removal) of the condition(s) in the R&D BER of full access to the results and/or access to pre-existing know-how (together the ‘access conditions’) in case R&D agreements are concluded with SMEs or with academic bodies/research institutes, the positions were more mixed, with 8-9 respondents considering that removing these access conditions would encourage the participation of SMEs in R&D agreements; while 4-5 respondents considered that limiting these access conditions would not encourage such participation. Up to 3 respondents to the open public consultation had the opposite view. In terms of impact, the few respondents that expressed an opinion in the open public consultation indicated that limitation (and/or potential removal) of the access condition would have a positive or very positive impact on competition in the market (8 respondents), on prices (4 respondents), quality of products/services (7 respondents), on innovation / investment in R&D (10 respondents), on the self-assessment of horizontal R&D agreements (9 respondents), on cooperation with SMEs in R&D (11-10 respondents), on cooperation with academic bodies/research institutes in R&D (9-8 respondents), on costs for the organisation (6 respondents), on legal certainty (7-6 respondents) and on harmonised application of competition rules by national competition authorities and national courts (6 respondents). A few respondents (up to 2 respondents) had a negative opinion.

On the definition of competing undertakings where research institutes and/or academic bodies are involved in R&D agreements, a limited number of respondents (8) considered that the clarification of the definition of competing undertakings would encourage the participation of research institutes/academic bodies in R&D agreements and would have a positive (or very positive) impact on competition in the market (2 respondents), on prices (2 respondents), quality of products/services (3 respondents), on innovation / investment in R&D (4 respondents), on the self-assessment of horizontal R&D agreements (7 respondents), on cooperation with academic bodies/research institutes in R&D (6 respondents), on costs for the organisation (3 respondents), on legal certainty (5 respondents) and on harmonised application of competition rules by national competition authorities and national courts (6 respondents). A few respondents, however, had a negative opinion (up to 3 respondents).

The Commission also explored how the access conditions affect R&D cooperation agreements concluded by all types of undertakings (e.g. large, medium, small, etc.). The few respondents that expressed an opinion indicated that the condition of full access to the final results (15 respondents) and the condition of access to pre-existing know-how indispensable for the exploitation of the R&D results (9 respondents) affect negatively or very negatively the conclusion of R&D agreements. Only a few respondents (2 and 3, respectively) have the opposite view.

The limitation of access conditions, according to the few respondents that expressed a view, would encourage the conclusion of R&D cooperation agreements that do not raise competition concerns (13-15 respondents) but two respondents disagreed. In addition, a limited number of respondents considered that the limitation of the access conditions would have a positive or very positive impact on competition in the market (8-10 respondents), on prices (4-7 respondents), quality of products/services (9-11 respondents), on innovation/investment in R&D (11-14 respondents), on the self-assessment of horizontal R&D agreements (9-11 respondents), on costs for the business (7-10 respondents), on legal certainty (11-14 respondents) and on harmonised application of competition rules by national competition authorities and national courts (8-10 respondents). A few respondents, however, had a negative opinion (up to 4 respondents).

3.3.Specialisation / production agreements

The proposed policy options for specialisation/joint production agreements included:

I.the potential introduction of a specific category of specialisation/production agreements exempted by the Specialisation BER, subject to conditions to be defined, where such agreements are concluded by SMEs;

II.expanding the definition of unilateral specialisation agreements to include more than two parties;

III.widening the exemption of the Specialisation BER to include subcontracting agreements with a view to expanding production, and

IV.verifying the conditions of the exemption under the Specialisation BER as to the requirement of joint distribution for unilateral or reciprocal cooperation agreements.

On the introduction of a specific exemption for specialisation/production agreements concluded by SMEs, the respondents that expressed a view (7) considered that the introduction of such an exemption would encourage the participation of SMEs in specialisation/production and would have a positive (or very positive) impact on competition in the market (5 respondents), on prices (2 respondents), quality of products/services (6 respondents), on innovation (6 respondents), on the self-assessment of horizontal production/specialisation agreements (5 respondents), on cooperation by SMEs in production/specialisation (7 respondents), on level of production (4 respondents), on costs for the organisation (4 respondents), on legal certainty (7 respondents) and on harmonised application of competition rules by national competition authorities and national courts (4 respondents). A few respondents, however, had a negative opinion (up to 2 respondents).

On the expansion of the definition of unilateral specialisation agreements to include more than two parties, the respondents that expressed a view considered likely (12 respondents) or very likely (5 respondents) that such expansion of the definition would allow to exempt pro-competitive agreements among competitors (actual or potential). There were no negative opinions. In addition, respondents considered that the expansion of the definition of unilateral specialisation agreements would have a positive or very positive impact on competition in the market (10 respondents), on prices (11 respondents), quality of products/services (13 respondents), on innovation (15 respondents), on level of production (15 respondents), on the self-assessment of specialisation/production agreements (10 respondents), on costs for the business (15 respondents), on legal certainty (12 respondents) and on harmonised application of competition rules by national competition authorities and national courts (10 respondents). None of the respondents indicated that this policy option would have a negative impact on any of these variables.

On widening the exemption of the Specialisation BER to include subcontracting agreements with a view to expanding production, the respondents that expressed a view considered likely (8 respondents) or very likely (3 respondents) that the widening of the exemption would allow to exempt pro-competitive agreements. However, two respondents expressed a negative opinion. In terms of impact, respondents considered that widening the exemption of the Specialisation BER to include subcontracting agreements with a view to expanding production would have a positive or very positive impact on competition in the market (6 respondents), on prices (9 respondents), quality of products/services (10 respondents), on innovation (10 respondents), on level of production (10 respondents), on the self-assessment of specialisation/production agreements (6 respondents), on costs for the business (10 respondents), on legal certainty (7 respondents) and on harmonised application of competition rules by national competition authorities and national courts (7 respondents). None of the respondents indicated that this policy option would have a negative impact

On the requirement of joint distribution for unilateral or reciprocal cooperation agreements, the 7 respondents that answered considered that the impact of allowing under the Specialisation BER that only one party distributes the contract products would be positive or very positive on competition in the market (7 respondents), on the level of market concentration (4 respondents), on the volume of products in the market (6 respondents), on prices for consumers (5 respondents), on innovation (7 respondents) and on investment in production (7 respondents) Two respondents however, had a negative or very negative opinion.

4.Targeted questionnaires

4.1.Introduction

In addition to the open public consultation, DG COMP also sent out targeted questionnaires to stakeholders that had expressed an interest in R&D and specialisation agreements in the evaluation phase of the HBERs review or that were recommended by other Commission DGs and services. As regards the targeted questionnaires, the Commission received 10 contributions to the targeted questionnaire on R&D and 4 contributions to the targeted questionnaire on specialisation/production. Among the 10 responses received by the Commission regarding the targeted questionnaire on R&D, there were 1 research institute, 1 SME, 7 large companies and a respondent that identified as ‘other’. All 4 respondents to the targeted consultation on specialisation agreements were large companies.

4.2.R&D agreements

The 10 respondents to the R&D targeted questionnaire were aware of the rules exempting certain categories of R&D agreements from the applicability of the competition rules prohibiting agreements between competitors under the R&D BER and the Horizontal Guidelines. In addition, most of them are or have been party to one or several types of R&D cooperation agreements in the last ten years (e.g. joint R&D, paid-for R&D and/or joint exploitation of results). Moreover, the majority of them have verified whether their R&D agreement could benefit from the exemption under R&D BER or the Horizontal Guidelines and have designed or modified an R&D agreement to take account of and make use of the rules for exemption set out in the R&D BER or the Horizontal Guidelines (including that the assessment could be done in-house without external legal assistance).

The views on whether the criteria and conditions in the R&D BER were easy or difficult to comply with were mixed. This concerned in particular the question of determining whether the combined market shares of the parties is below the threshold (25%) and verifying the conditions of full access to R&D results to all parties or providing access to indispensable pre-existing know-how.

With regard to the identification of competitors, the top three criteria used to identify an actual competitor in the context of R&D in the respondents’ specific industry/sector were: (i) the nature/scope of their R&D activities (8 respondents); (ii) the exploitation capabilities (e.g. production capacity, distribution, etc.) (5 respondents) and (iii) the stage of the R&D process at which they are (4 respondents).

With regard to the identification of competing R&D activities, nearly all respondents indicated that they were always (2 respondents) or sometimes (7 respondents) able to identify other companies/academic bodies/research institutes that were conducting competing R&D activities. This was particularly the case if the R&D activities of these companies/academic bodies/research institutes were at a mid- (e.g. development of most promising options) or late stage of development (e.g. final trial-phases, patent application phase, etc.).

On the number of competitors engaged in competing R&D activities at the same time, three respondents indicated that there are at least 5 or more organisations, while 6 respondents indicated that the number of competitors depended on the specific project.

On market shares, nearly all respondents have calculated or estimated the market shares of their organisation in the past ten years (8 respondents). In addition, many respondents stated that they are able to estimate the market shares of the top three players conducting R&D activities in their industry/sector (6 respondents) and they are able to identify the revenues (7 respondents) or the R&D investments (4 respondents) of other organisations conducting competing R&D activities in their industry/sector (7 respondents). Half of the respondents verified whether the R&D agreement fulfilled the market share threshold at the time when the R&D agreement was concluded/signed and again when a significant change took place (e.g. change of ownership for example due to the merger or acquisition of one of the parties to the agreement, etc.).

On access to the final R&D results, half of the respondents indicated that they have never or rarely accepted to limit their access to the final R&D results and use such results only for the purpose of further research.

On indispensability and compensation, the majority of respondents (7) indicated that it was difficult (6) or very difficult (1) to decide what know-how is indispensable for the purposes of exploitation of the R&D results; but they also indicated that they either received (7) or paid (4) compensation for giving or obtaining access to the R&D results for the purposes of further research or exploitation or for obtaining access to pre-existing know-how that is indispensable for the purposes of exploitation of the R&D results.

With regard to exploitation of R&D results, respondents either negotiated or sometimes already agreed on the exploitation of the results at the same time as the R&D agreement.

The targeted questionnaire aimed at gathering views and evidence from stakeholders on other various areas concerning R&D agreements.

4.3.Specialisation agreements

The 4 respondents to the specialisation targeted questionnaire were aware of the rules exempting certain categories of specialisation/production agreements from the applicability of the competition rules prohibiting agreements between competitors under the Specialisation BER and the Horizontal Guidelines.

The 4 respondents indicated that, in the last ten years, they are or they have been party to one or several types of specialisation/production agreements (e.g. joint production, horizontal subcontracting agreements) and that they had verified whether their R&D agreement could benefit from the exemption under R&D BER or the Horizontal Guidelines. One respondent had designed or modified a specialisation/production agreement to take account of and make use of the rules for exemption set out in the Specialisation BER or the Horizontal Guidelines.

On the applicability of the Specialisation BER, the majority of the respondents considered feasible the application of the rules contained in the Specialisation BER, i.e. the assessment can be done in-house without external legal assistance. On the difficulty of meeting/fulfilling the requirements of the Specialisation BER, 1 to 3 respondents considered the requirements difficult or very difficult to fulfil, in particular the market share threshold (3 respondents).

On market shares, 3 respondents have calculated or estimated the market shares of their organisation in the past ten years. The 4 respondents are able to estimate the market shares of the top three players in their industry/sector.

5.Workshop on SMEs in R&D and specialisation agreements

DG COMP also organised a workshop on SMEs in R&D and specialisation/production agreements on 21 October 2021. This workshop was attended by representatives of 10 SMEs, 8 large companies and 10 academic bodies/research organisations.

For R&D agreements, the workshop aimed at gathering views and evidence from stakeholders on two specific questions linked to the policy options, namely : (i) whether an exemption for R&D agreements concluded by SMEs should be introduced under the R&D BER (and if so based on which criteria) and (ii) whether joint exploitation of R&D results and distribution should be excluded from the exemption under the R&D BER.

Participants were divided in four groups. Each group was led by a moderator and had separate discussions on each question. According to the participants, the questions should be replied negatively, i.e. an exemption for agreements concluded by SMEs should not be introduced in the R&D BER and joint exploitation should not be excluded from the exemption. Such changes would make the existing rules more complex and more difficult to interpret. In particular when it comes to an exemption specifically for SMEs, the participants expressed doubts about using other criteria than market shares for capturing the market position of SMEs. In light of the already existing market share threshold in the R&D BER it was considered that a special category for SMEs would introduce unneeded complexity without bringing obvious benefits to SMEs. Participants indicated that clarity on the rules on innovation would be desirable.

For specialisation agreements, the workshop aimed at gathering views and evidence from stakeholders on two specific questions linked to the policy options, namely: (i) whether an exemption for specialisation/production agreements concluded by SMEs should be introduced (and if so based on which criteria) under the Specialisation BER and (ii) whether distribution should be excluded from the exemption under the Specialisation BER.

Participants were divided into four groups. Each group was led by a moderator and had separate discussions on each question. According to the participants, the questions should be answered negatively, i.e. an exemption for agreements concluded by SMEs should not be introduced in the Specialisation BER and distribution should not be excluded from the exemption under the Specialisation BER. Such changes would make the existing rules more complex and more difficult to interpret. In particular when it comes to an exemption specifically for SMEs, the participants expressed doubts about using criteria other than market shares for capturing the market position of SMEs. In light of the already existing market share threshold in the Specialisation BER, it was considered that a special category for SMEs would introduce unneeded complexity without bringing obvious benefits to SMEs. However, participants indicated that clarity on the rules on ancillary agreements would be desirable.

6.Consultation of national competition authorities

6.1.Introduction

On 14 July 2021, DG COMP asked the National Competition Authorities (‘NCAs’) to share their opinion on the policy options set out in the IIA and on other elements for revision in the HBERs and the Horizontal Guidelines. NCAs are bound by the HBERs when assessing R&D and specialisation agreements. In contrast, the Horizontal Guidelines are non-binding for the NCAs but all NCAs responding to the consultation confirmed they take account of the Horizontal Guidelines when assessing other horizontal cooperation agreements. The consultation was available until 30 September 2021. The Commission received 16 contributions from the NCAs of 15 Member States together with the NCA of Norway.

The purpose of this summary is to give an overview of the replies received from the NCAs without reference to specific points or individual opinions expressed by them. Therefore, in the following, reference is made generically to “NCAs”, and only where NCAs expressed diverging opinions, both sides of the argument are presented.

This summary follows the structure of the online questionnaire used for the public consultation, which mirrored the policy options and other issues set out in the IIA. The statistics computed in this summary are only based on the contributions to the targeted questionnaires submitted via the online questionnaire.

Neither the opinions of the NCAs reflected in the contributions received nor the views reflected in this summary can be regarded as the official position of the Commission, or its services, and thus do not bind the Commission in any way. The summary of the contributions is preliminary and does not prejudge the outcome of the impact assessment phase, including the draft revised rules to be published for stakeholder consultation.

6.2.Contributions to the consultation

The consultation aimed in particular at gathering opinions and evidence from the NCAs on the policy options set out in the IIA concerning the current rules of the R&D BER and the Specialisation BER.

6.2.1.R&D agreements

The Commission explored options to encourage the participation of small and medium-sized enterprises (‘SMEs’), research institutes and/or academic bodies in R&D and production/specialisation agreements that do not raise competition concerns.

The proposed policy options included: (i) the potential introduction of a specific category of R&D agreements exempted by the R&D BER, subject to conditions to be defined, in case such agreements were concluded by SMEs; (ii) clarifying the definition of competing undertakings in case research institutes and/or academic bodies are involved in R&D agreements; and/or (iii) limiting (and/or potentially removing) the condition(s) in the R&D BER of full access to the results and/or access to pre-existing know-how in case R&D agreements are concluded with SMEs, academic bodies and/or research institutes.

On the introduction of a specific exemption for R&D agreements concluded by SMEs, 10 respondents did not have an opinion or did not provide an answer. 5 NCAs considered that the introduction of such an exemption would encourage the participation of SMEs in R&D. One NCA, however, had a negative opinion. In terms of impact, the limited number of NCAs that expressed an opinion indicated that the proposed policy option would have a positive (or very positive) impact on competition in the market (4 NCAs), on prices (2 NCAs), quality of products/services (8 NCAs), on innovation / investment in R&D (9 NCAs), on the self-assessment of horizontal R&D agreements (7 NCAs), on cooperation by SMEs in R&D (10 NCAs), on costs for the NCA (3 NCAs), on legal certainty for companies involved in R&D (9 NCAs) and on harmonised application of competition rules NCAs and national courts (6 NCAs). A few NCAs, however, had a negative opinion (up to 2 NCAs).

On the limitation of the conditions in the R&D BER of full access to the results and/or access to pre-existing know-how (together the ‘access conditions’) in case R&D agreements are concluded with SMEs, the 13 NCAs did not have an opinion or did not provide an answer. 2 NCAs considered that limiting these access conditions would encourage the participation of SMEs in R&D agreements; while one NCA, however, had a negative opinion. On the removal of the conditions in the R&D BER of the access conditions in case R&D agreements are concluded with SMEs, 13 NCAs did not have an opinion or did not provide an answer. One NCA considered that the removal of these access conditions would encourage the participation of SMEs in R&D agreements; while two NCAs had a negative opinion.

On the limitation (and/or potential removal) of the access conditions in the R&D BER in case R&D agreements are concluded with research institutes/academic bodies, only 1 NCA considered that limiting these access conditions would encourage the participation of research institutes/academic bodies in R&D agreements. None of the NCAs had a positive opinion regarding the removal of the access conditions.

In terms of impact, the few NCAs that expressed an opinion indicated that limitation (and/or potential removal) of the access condition would have a positive or very positive impact on competition on the market (1 NCA), on prices (1 NCA), quality of products/services (1 NCA), on innovation / investment in R&D (3 NCAs), on the self-assessment of horizontal R&D agreements (5 NCAs), on cooperation with SMEs in R&D (4-5 NCAs), on cooperation with academic bodies/research institutes in R&D (5 NCAs), on costs for the NCA (none), on legal certainty (3-4 NCAs) and on harmonised application of competition rules by national competition authorities and national courts (3 NCAs). A few respondents (up to 2 NCAs) had a negative opinion.

On the definition of competing undertakings where research institutes and/or academic bodies are involved in R&D agreements, several NCAs (8) considered that the clarification of the definition would encourage the participation of research institutes/academic bodies in R&D agreements. One NCA, however, had a negative opinion. In terms of impact, the NCAs that expressed an opinion indicated that the proposed policy option would have a positive (or very positive) impact on competition in the market (5 NCAs), on prices (1 NCA), quality of products/services (3 NCAs), on innovation / investment in R&D (6 NCAs), on the self-assessment of horizontal R&D agreements (8 NCAs), on cooperation with research institutes/academic bodies in R&D (9 NCAs), on costs for the NCA (3 NCAs), on legal certainty for companies involved in R&D (9 NCAs) and on harmonised application of competition rules NCAs and national courts (5 NCAs). A few NCAs, however, had a negative opinion (up to 2 NCAs).

The Commission also explored how the access conditions affect R&D cooperation agreements concluded by all types of undertakings (e.g. large, medium, small, etc.). The NCAs that expressed an opinion indicated that the condition of full access to the final R&D results (3 NCAs) and the condition of access to pre-existing know-how indispensable for the exploitation of the R&D results (4 NCAs) had a positive effect on the conclusion of R&D agreements. One NCA had the opposite view.

Moreover, 3 NCAs considered that the limitation of these access conditions would not encourage the conclusion of R&D cooperation agreements that do not raise competition concerns but 2 NCAs disagreed. 1 NCA was in favour of removing both access conditions, 1 NCA was in favour of removing the condition of access to pre-existing know-how and one NCA was not in favour of removing any of these access conditions. In terms of impact, the NCAs that expressed an opinion considered that the limitation of the access conditions would have a positive or very positive impact on competition in the market (1 NCA), on prices (1 NCA), quality of products/services (1-2 NCAs), on innovation/investment in R&D (2 NCAs), on the self-assessment of horizontal R&D agreements (3-4 NCAs), on cooperation in R&D (3-4 NCAs), on costs for the NCA (1 NCA), on legal certainty (4 NCAs) and on harmonised application of competition rules by national competition authorities and national courts (4 NCAs). A few respondents, however, had a negative opinion (up to 2 NCAs).

On market share thresholds, the NCAs indicated that undertakings should verify whether their horizontal cooperation agreements fulfil the relevant market share thresholds: (i) at the time when the horizontal cooperation agreement is concluded (2 NCAs), (ii) at the time when the horizontal cooperation agreements is concluded and on a regular basis throughout the lifetime of the agreement (e.g. on an annual basis) (7 NCAs) or (iii) at the time when the horizontal cooperation agreement is concluded and again if and when a significant change takes place (e.g. significant increase production and/or sales, change of ownership for example due to the merger or acquisition of one of the parties to the agreement, etc.) (3 NCAs).

6.2.2.Specialisation / production agreements

The Commission explored options to encourage the participation of SMEs in production/specialisation agreements that do not raise competition concerns.

The proposed policy options included: (i) the potential introduction of a specific category of specialisation/production agreement exempted by the Specialisation BER, subject to conditions to be defined, in case such agreement is concluded by SMEs; (ii) expanding the definition of unilateral specialisation agreements; (iii) widening the exemption of the Specialisation BER to include subcontracting agreements with a view to expanding production, and (iv) verifying the conditions of the exemption under the Specialisation BER as to the requirement of joint distribution for unilateral or reciprocal cooperation agreements.

On the introduction of a specific exemption for specialisation /production agreements concluded by SMEs, 12 respondents did not have an opinion or did not provide an answer. 5 NCAs considered that the introduction of such an exemption would encourage the participation of SMEs. In terms of impact, the limited number of NCAs that expressed an opinion indicated that the proposed policy option would have a positive (or very positive) impact on competition in the market (3 NCAs), on prices (2 NCAs), quality of products/services (8 NCAs), on innovation (7 NCAs), on the self-assessment of specialisation agreements (7 NCAs), on cooperation by SMEs in specialisation (9 NCAs), on level of production (4 NCAs), on costs for the NCA (1 NCA), on legal certainty for companies involved in specialisation (8 NCAs) and on harmonised application of competition rules NCAs and national courts (4 NCAs). A few NCAs, however, had a negative opinion (2 NCAs).

On the expansion of the definition of unilateral specialisation agreements 111 to include more than two parties, the NCAs that expressed a view considered likely (3 NCAs) that such expansion of the definition would allow to exempt pro-competitive agreements among (actual or potential) competitors. There were no negative opinions. In addition, respondents considered that the expansion of the definition of unilateral specialisation agreements would have a positive or very positive impact on competition in the market (1 NCA), on prices (1 NCA), quality of products/services (3 NCAs), on innovation (3 NCAs), on level of production (2 NCAs), on the self-assessment of specialisation/production agreements (4 NCAs), on cooperation in specialisation (5 NCAs), on costs for the NCA (1 NCA), on legal certainty (4 NCAs) and on harmonised application of competition rules by national competition authorities and national courts (4 NCAs). One NCA indicated that this policy option would have a negative impact on one or several of these variables.

On widening the exemption of the Specialisation BER to include subcontracting agreements with a view to expanding production, 112 the NCAs that expressed a view considered likely (2 NCAs) that the widening of the exemption would allow to exempt pro-competitive agreements. However, one NCA had a negative opinion. In terms of impact, respondents considered that widening the exemption of the Specialisation BER to include subcontracting agreements with a view to expanding production would have a positive or very positive impact on competition in the market (1 NCA), on prices (1 NCA), quality of products/services (2 NCAs), on innovation (1 NCA), on level of production (2 NCAs), on the self-assessment of specialisation/production agreements (3 NCAs), on cooperation in specialisation (3 NCAs), on costs for the NCA (1 NCA), on legal certainty (3 NCAs) and on harmonised application of competition rules by national competition authorities and national courts (3 NCAs). None of the NCAs had a negative opinion in terms of impact.

On the requirement of joint distribution for unilateral or reciprocal cooperation agreements, the NCAs that expressed a view considered that the impact of allowing under the Specialisation BER that only one party distributes the contract products would be positive or very positive on competition in the market (1 NCA), on prices (1 NCA), on quality of products/services (1 NCA), on innovation (1 NCA), on level of production (1 NCA), on the self-assessment of specialisation/production agreements (4 NCAs), on cooperation in specialisation (3 NCAs), on costs for the NCA (1 NCA), on legal certainty (6 NCAs) and on harmonised application of competition rules by national competition authorities and national courts (4 NCAs). A few NCAs, however, had a negative opinion (up to 2 NCAs).

On whether the exclusive supply obligations foreseen in Article 1(1)(o) of the 2010 Specialisation BER should be expanded to cover a restriction to supply all third parties or whether it should remain limited to not supplying competitors, the NCAs that expressed a view (5 NCAs) indicated that restrictions to supply other competitors should be maintained; while one NCA considered that restrictions should be expanded to also cover supply to other third parties.

On the type of distribution agreements linked to a specialisation (production) agreement that should be allowed to benefit from the exemption under the Specialisation BER, the NCAs that expressed a view indicated the exemption should benefit: (i) the distribution of products/services carried out by way of a joint team, organisation or undertaking (8 NCAs); (ii) the distribution of products/services carried out by a third party appointed by the parties on an exclusive or non-exclusive basis, provided that the third party is not a competing undertaking (9 NCAs); or (iii) the distribution of products/services carried out by only one of the parties of the agreement (3 NCAs).

7.Consultation on draft revised HBERs and draft revised Guidelines

7.1.Introduction

On 1 March 2022, the Commission published drafts of the revised R&D and Specialisation Block Exemption Regulations (together ‘HBERs’) and Horizontal Guidelines for stakeholder comments.

Stakeholders were invited to submit comments on the draft revised rules that reflected the Commission’s proposed changes to the HBERs (‘draft revised HBERs’), together with the draft guidance that reflected the Commission’s proposed changes to the Horizontal Guidelines (‘draft revised Horizontal Guidelines’). The draft revised HBERs and draft revised Horizontal Guidelines were published for comments in all official EU languages.

The Commission received 100 submissions from stakeholders with comments on the draft revised HBERs and Horizontal Guidelines. In addition, 11 NCAs submitted comments on the draft revised rules.

Neither the views of the stakeholders reflected in the comments received nor the views reflected in this summary can be regarded as the official position of the Commission, or its services, and thus do not bind the Commission in any way. This summary of the contributions is preliminary and does not prejudge the outcome of the impact assessment, including the impact assessment report.

Of the 111 submissions received, 11 emanate from NCAs, as mentioned above, 41 emanate from business associations, 22 from companies, 10 from law firms, 10 from associations of legal professionals 5 from public authorities, 3 from economic consultancies, 2 from NGOs and 1 from a trade union and 1 from a consumer association). The Commission also received 5 submissions from EU citizens.

The companies and business associations that submitted comments cover several sectors of the European economy. The more represented sectors include the technology sector (including companies and associations interested in intellectual property rights and standardisation), the automotive sector, the retail sector, agriculture and broadcasting.

7.2.General comments

Stakeholders did not provide any relevant input on the proposal not to include a specific exemption in the HBERs for horizontal agreements concluded by or with SMEs. In light of the already existing market share threshold in the HBERs and the fact that most SMEs would fall below this market share, it was considered that a special exemption category for SMEs would introduce unneeded complexity without bringing obvious benefits to SMEs. Instead, stakeholders in general appeared positive of the introduction of a specific section in the draft Horizontal Guidelines on the application of the HBERs (notably aimed at facilitating application of the rules by SMEs).

7.3.R&D agreements

The current R&D BER contains conditions for exemption requiring (i) full access to the results of the R&D and/or (ii) access to pre-existing know-how. During the open public consultation, the Commission explored whether it should limit these conditions, for example by including limitations to the duration or scope of these two access requirements. Based on the views expressed in the open public consultation and in the expert reports, the Commission proposed no changes to these two conditions in the R&D BER. While the requirements to give access to the results of the R&D and/or to pre-existing know-how may cause some firms to refrain from entering into R&D cooperation, limitations to these conditions may also impede competition. The access requirements benefit SMEs – and other parties to R&D agreements – by ensuring that both parties have equal possibilities of competing on the market once the R&D efforts can be marketed. In addition, the conditions are also not absolute in the sense that the requirement of access to pre-existing know-how only concerns know-how that is indispensable for the exploitation of the results of the R&D effort. In addition, where the parties limit their rights of exploitation, the condition concerning full access to the results can also be limited accordingly. Finally, the R&D BER allows the parties to compensate each other for such access, and the access requirements are also common practice in R&D agreements.

In the public consultation on the revised rules, 36 out of the 111 replies included comments on the draft revised R&D BER and the corresponding section of the draft revised Horizontal Guidelines. 11 out of these 36 stakeholders were critical of the choice not to limit the conditions applicable to the exemption provided by the R&D BER. Virtually all stakeholders who expressed this opinion are large companies or organisations.

Pursuant to the current R&D HBER, R&D agreements relating to products or technologies that would create a completely new market and R&D agreements concerning an R&D pole are considered as agreements between non-competing undertakings and can therefore benefit from the safe harbour without being subject to any market share threshold. The draft revised R&D BER proposed to make the exemption of such agreements subject to new conditions, to take into account the competitive dynamic between companies at the R&D level.

The criteria proposed in the draft revised R&D BER consist of three elements: (i) the parties to the R&D agreement are competing in innovation, (ii) there remain at least three other competing R&D efforts and (iii) the competing R&D efforts should be comparable to those of the parties, to be assessed on the basis of reliable information concerning (i) the size, stage and timing of the R&D efforts, (ii) the third parties’ (access to) financial and human resources, their intellectual property, know-how or other specialised assets, their previous R&D efforts, and (iii) the third parties’ capability and likelihood to exploit directly or indirectly possible results of their R&D efforts on the internal market.

36 out of the 111 replies to the public consultation included comments on the draft revised R&D BER and the corresponding section of the draft revised Horizontal Guidelines. Of the 36 replies, 2 emanate from NCAs, 13 emanate from business associations, 7 from associations of legal professionals, 4 emanate from companies, 6 from law firms). The Commission also received 1 submission from a EU citizen and 2 from a public authority.

In their replies, in general, the NCAs expressed support for this proposal. Two NCAs provided concrete comments on the draft revised R&D BER and the corresponding section of the draft revised Guidelines, in the form of requests for clarifications, for example, the term “fields of use” or the new examples provided in the draft revised Guidelines.

14 of the 36 stakeholders who provided comments on the draft revised rules regarding R&D agreements (including the Austrian Federal Ministry for Digital and Economic Affairs and the French authorities) stated that the new approach risks increasing the cost of R&D collaborations and would discourage companies from cooperating in innovation in the EU.

25 of the 36 stakeholders who provided comments on the draft rules stated that the proposed exemption criteria would be difficult to apply in practice. They explained that the development of new products and technologies tends to be highly commercially sensitive and few – if any – concrete details about such innovation products are generally known or accessible in the public domain. As a result, an assessment of comparability of competing R&D efforts “made on the basis of reliable information” and at a very early stage of R&D efforts (when the markets concerned do not yet exist) is likely to be very challenging for market players.

7.4.Specialisation agreements

Only very few stakeholders commented on the draft revised Specialisation BER. The majority of those that responded welcomed the expansion of the definition of ‘unilateral specialisation agreements’ in Article 1(a)(1) of the draft revised Specialisation BER to cover agreements between more than two parties They remarked that this expansion may strengthen the incentives of parties to consider procompetitive unilateral specialisation agreements. This would be particularly beneficial for SMEs who may have more needs to enter into such agreements.

All stakeholders that commented on the draft revised rules on specialisation agreements agreed with the proposal in the draft revised Horizontal Guidelines to clarify that horizontal subcontracting agreements in general, and not only those with a view to expanding production, can benefit from the safe harbour of the Horizontal Guidelines.

8.Workshop on the revision of the R&D Block Exemption Regulation

On 13 September 2022, the Commission organised a workshop that was announced on DG Competition’s website, and stakeholders with knowledge or experience of applying the R&D BER and Horizontal Guidelines were invited to participate. In addition, invitations were sent to stakeholders that had provided feedback to the Commission’s public consultation on the draft revised R&D BER and Horizontal Guidelines conducted between 1 March 2022 and 26 April 2022.

The feedback to the public consultation in relation to R&D agreements mainly concerned the new test proposed by the Commission for block-exempting R&D agreements between undertakings that compete in innovation (Article 6(3) of the draft revised R&D BER). According to this proposed test, such agreements would only be block-exempted in cases where there remain at least three other independent comparable R&D efforts (the ‘3+ test’).

In the light of this feedback, the workshop focused on the draft revised rules for so-called ‘pre-market’ R&D agreements, namely R&D agreements between undertakings competing in innovation, in scenarios where it is not possible to calculate market shares at the time the agreement is entered into. 33 participants attended the workshop. They represented 11 law firms, 7 companies and 7 associations.

The workshop participants were presented with six questions to guide the discussion: (1) on the basis of a practical example of a hypothetical pre-market R&D agreement, participants were asked under what conditions R&D agreements that restrict competition within the meaning of Article 101(1) of the Treaty should be block-exempted (emphasising that the Commission must have sufficient certainty that a category of agreements generally meets the conditions of Article 101(3) of the Treaty in order to block-exempt); (2) exploring the potential to narrow the scope of the 3+ test for pre-market R&D agreements (set out in Article 6(3) of the draft revised R&D BER), consisting in changing the definition of “undertakings competing in innovation” (which refers to the parties to the R&D agreement); (3) exploring ways of making the 3+ test easier to apply, consisting in changing the definition of “competing R&D efforts” (which refers to third parties); (4) exploring the assessment of the comparability of competing R&D efforts, set out in Article 7 (2) of the draft revised R&D BER; (5) exploring what information is available to companies to enable them to conduct the comparability assessment, and (6) exploring possible alternatives to the Commission’s proposed 3+ test.

Participants were divided into four groups, each containing representatives of law firms, companies and associations. Each group discussed four of the above questions in two separate sessions, led by a moderator.

According to several participants (mainly companies and law firms), pre-market R&D agreements are generally unlikely to raise antitrust concerns. On the one hand, these agreements are unlikely to create an appreciable restriction of competition, since there is too much uncertainty about the outcome of R&D projects, and the actual outcome of R&D projects can be quite different from the parties’ initial objective. And, on the other hand, the efficiencies resulting from such collaborations generally outweigh any possible restriction.

Participants from all categories said that the Commission’s proposed 3+ test for block-exempting pre-market R&D agreements is not workable, as companies do not have sufficient knowledge about their rivals’ R&D activities, in particular in industries where R&D activities are not structured. Participants therefore considered that the 3+ test would create legal uncertainty and increase the complexity of understanding, explaining and implementing the R&D BER. Regarding the possibility of narrowing the scope of the 3+ test (for example, applying it only in cases where the parties to the R&D agreement were already actively engaged in comparable R&D projects at the time they entered into their agreement), most participants from all categories considered that this would still not address the problems of complexity and uncertainty that the new test would create.

With regard to the assessment of the comparability of competing R&D efforts of third parties, companies and law firms indicated that collecting the information necessary to conduct such an assessment presents significant challenges, as this information is generally highly confidential. This information might be easy to collect in some sectors, e.g. in pharma where patent applications provide indications about competing R&D efforts, but not in all sectors.

In conclusion, participants from all categories suggested that a more appropriate solution to address any antitrust concerns raised by pre-market R&D agreements would be for the Commission to withdraw the benefit of the block exemption, as foreseen by Articles 10 and 11 of the draft revised R&D BER.

Annex 3: Who is affected by the initiative and how?

1.Practical implications of the initiative

The initiative consists in a revision and update of the HBERs and Horizontal Guidelines. As such, the initiative is largely a continuation of the existing rules, which the evaluation fundamentally confirmed to be useful and relevant rules for stakeholders.

In the assessment of the practical implications of the initiative, it is important to recall that the HBERs, together with the Horizontal Guidelines, do not impose any additional compliance obligations on businesses beyond those reflected in Article 101 of the Treaty. On the contrary, the rules aim to facilitate the work of businesses that have to self-assess their horizontal agreements to ensure compliance with Article 101 of the Treaty.

The revised HBERs and Horizontal Guidelines will primarily have practical implications for businesses and, indirectly, the law firms and other professionals advising businesses on compliance with Article 101 of the Treaty. The revised HBERs and Horizontal Guidelines will also have implications for the NCAs and national courts. Indirectly, the revised HBERs and Horizontal Guidelines will also positively affect consumers, but the initiative has no practical implications for them.

1.1.Businesses

The stakeholder group that would primarily be affected by the initiative is businesses, as they are the stakeholders that mostly use the HBERs and Horizontal Guidelines in their daily work. In practice, businesses use the HBERs and the Horizontal Guidelines to self-assess the compliance of their horizontal agreements with Article 101 of the Treaty. They use the HBERs to identify whether their agreements meet the conditions of the block exemptions. If an agreement meets the conditions set out in the HBERs, businesses know that the agreement benefits from the safe harbour and that Article 101(1) of the Treaty does not apply to it. Businesses use the Horizontal Guidelines to inform their understanding of the HBERs’ conditions and to have more guidance when determining whether an agreement meets the conditions of the safe harbour. They also use the Horizontal Guidelines for more guidance in self-assessing agreements that fall outside the safe harbour and are thus subject to Article 101(1) and 101(3) of the Treaty.

In the evaluation of the current rules, stakeholders unanimously confirmed that the HBERs and the Horizontal Guidelines are useful tools that greatly facilitate the self-assessment by businesses of horizontal agreements required by the wider legal framework. Since the initiative does not alter the core structure and framework of assessment provided by the rules, under the revised rules, businesses would need to perform a similar type of assessment as they currently do when checking their agreements against the conditions set out in the HBERs. Overall, therefore, the initiative would have clear benefits for businesses, as they would be able to continue relying on HBERs and Horizontal Guidelines. The initiative also revises the rules to address the problems of clarity and complexity. Additional clarity and rules that are simpler would greatly increase the level of legal certainty provided, which would in turn increase the ability of the rules to facilitate self-assessment by businesses.

The benefits of the HBERs are particularly important for SMEs, whose market shares are generally low and therefore do not exceed the market share thresholds of the HBERs, enabling them to benefit more often than other businesses from the block exemption.

Indirectly, law firms and other professionals advising businesses on compliance with Article 101 of the Treaty would also benefit from a clearer set of rules, which would allow them to more effectively advise businesses.

In particular, the preferred options set out in Section 8 of the report have different practical implications for different categories of businesses.

The introduction of a specific section on the application of the HBERs in the Horizontal Guidelines affects all businesses relying on the HBERs. They, and the (legal) professionals advising them can benefit from additional guidance on the different definitions, thresholds and hardcore provisions contained in the HBERs.

The expansion of the scope of the Specialisation BER to include unilateral cooperation agreements concluded by more parties benefits all businesses but SMEs in particular. They can use the extra flexibility and legal certainty given by the rules and would face reduced compliance costs.

The preferred option as regards R&D agreements concerning new products or R&D poles, which is to combine elements from policy options 1 and 2 would mean that businesses that enter into such agreements would have to ascertain whether their cooperation restricts competition within the meaning of Article 101(1) and if so whether they could benefit from the exemption under the R&D BER.

1.2.Enforcement authorities

The initiative would also have practical implications for the Commission, NCAs and national courts, all of which use the HBERs and Horizontal Guidelines in their enforcement work. Since the HBERs are binding on NCAs and national courts, they would have to take into account their revised provisions in order to assess the compatibility of horizontal agreements with Article 101 of the Treaty. The Horizontal Guidelines, which are binding on the Commission, do not bind NCAs or national courts, but they are typically taken into account when assessing the compatibility of horizontal agreements with Article 101 of the Treaty. Overall, since the initiative would not fundamentally alter the core structure and framework of assessment provided by the HBERs (e.g. the concepts of market share thresholds, hardcore restrictions and (in the case of R&D agreements) conditions for exemption), the practical implications as regards the assessments that enforcement authorities carry out when enforcing Article 101 of the Treaty remain limited. Enforcement authorities can also benefit from the new sections in the Horizontal Guidelines on the application of the BERs. As regards the introduction of new conditions for the exemption of R&D agreements concerning products or technologies that would create a completely new market or concerning R&D poles, this would not have significant practical implications as regards the assessment that enforcement authorities carry out when enforcing Article 101 of the Treaty. The impact on enforcement authorities is explained in more detail in Sections 6.1.5. and 6.2.5. of the report.

1.3.Consumers

The initiative is not expected to have any direct practical implications for consumers, as the HBERs and Horizontal Guidelines do not apply to them and are usually not used by them in any relevant manner. Indirectly, however, consumers would be positively affected by the initiative, in that they may benefit from lower prices, increased quality and variety of products and services, as well as the results of increased incentives to innovate delivered by innovation competition. This is explained in more detail in Sections 6.1.4 and 6.2.4. of the report.

2.Summary of costs and benefits

As explained in Section 9 of the report, it did not prove possible to collect evidence that would make it possible to quantify the costs and benefits of the identified policy options. The difficulty in quantifying the costs and benefits of the HBERs, together with the Horizontal Guidelines, had already become apparent during the evaluation phase. As explained in the Evaluation SWD, this is because businesses appear to assess the costs they incur to ensure compliance of their business operations with competition law at a general level, notably without distinguishing between the type of agreement concerned or the instrument relied on for the purposes of their self-assessment. As such, it was not possible to estimate the effects on costs in a quantitative manner.

I. Overview of Benefits (total for all provisions)
Description	Amount	Comments
Direct benefits
Compliance costs reduction re. the new sections on the application of the HBERs	Not possible to quantify	Businesses will better be able to self-assess their compliance with the HBERs and are likely to require less (extensive) external advice
Enforcement cost reduction re. the new sections on the application of the HBERs	Not possible to quantify	The Commission, NCAs and national courts will better be able to interpret the provisions of the HBERs which may help in rejection of complaints and general enforcement
Compliance costs reduction re. the expansion of the scope of the Specialisation BER	Not possible to quantify	The conclusion of unilateral specialisation agreements is facilitated and businesses will require less (external) advice
Enforcement costs reduction re. the expansion of the scope of the Specialisation BER	Not possible to quantify	The enforcement of unilateral specialisation agreements by the Commission, the NCAs and national courts is facilitated now these agreements can be concluded with more than one party
Increased flexibility for businesses in concluding specialisation agreements		The conclusion of unilateral specialisation agreements will become a further alternative from the range of specialisation agreements exempted by the Specialisation BER
Market efficiency improvements re. the new sections on the application of the HBERs and the expansion of the scope of the Specialisation BER	Not possible to quantify	The introduction of a new section on the application of the HBERs and the expansion of the scope of the Specialisation BER will contribute to higher economic productivity, improved allocation of resources and more innovation
Compliance cost reduction re. the stricter enforcement of R&D agreements concerning new products or R&D poles	Not possible to quantify	Businesses will have more guidance in the R&D BER and the Horizontal Guidelines providing them with more legal certainty regarding R&D agreements concerning new products or R&D poles
Reduced negative impact re. the stricter enforcement of R&D agreements concerning new products or R&D poles	Not possible to quantify	Innovation competition and new product markets are better protected
Enforcement cost reduction re. the stricter enforcement of R&D agreements concerning new products or R&D poles	Not possible to quantify	The Commission, NCAs and national courts will benefit from the fact that R&D agreements concerning new products or R&D poles will receive the same treatment in antitrust as in merger enforcement
Legal certainty	Not possible to quantify	Overall, the initiative is expected to increase the level of legal certainty as compared to the existent rules. During the evaluation, stakeholders explained that legal certainty in the application of the HBERs together with the Horizontal Guidelines can lead to less legal disputes between parties to an agreement.
Indirect benefits
Indirect compliance costs re. the new sections on the application of the HBERs and the expansion of the scope of the Specialisation BER	Not possible to quantify	All sectors can benefit from the fact that companies involved in R&D and specialisation agreements have more legal certainty.
An improved offer for businesses/consumers downstream re. the expansion of the scope of the Specialisation BER	Not possible to quantify	Businesses and consumers relying on businesses involved in unilateral specialisation agreements may receive the positive effects from the facilitation of the rules
Market efficiency improvements re. the expansion of the scope of the Specialisation BER		Improved allocation of resources now businesses can sort their needs from more than one counterpart
Wider economic benefits	Not possible to quantify	Businesses and consumers that rely on the results of R&D agreements concerning new products or R&D poles will have more choice also in the long run

II. Overview of Costs – Preferred Options
		Citizens/Consumers		Businesses		Administrations
		One-off	Recurrent	One-off	Recurrent	One-off	Recurrent
Expansion of the scope of the Specialisation BER	Direct adjustment costs			Companies already involved in production agreements may have to review their agreement
	Direct administrative costs
	Direct regulatory fees and charges
	Direct enforcement costs						Reduced enforcement costs (broader scope of the exemption)
	Indirect costs
Treatment of R&D agreements for which it is not possible to calculate market shares	Direct adjustment costs			Companies already involved in this category of R&D agreements may have to review their agreement
	Direct administrative costs				Increased compliance cost for companies participating in R&D Agreements for which it is not possible to calculate market shares
	Direct regulatory fees and charges
	Direct enforcement costs						Reduced enforcement costs (enforcement of antitrust and mergers more aligned)
	Indirect costs				Stricter approach may initially disincentivize businesses from entering into R&D agreements for which it is not possible to calculate market shares

3.Sustainable Development Goals

The analysis of the content of the Evaluation SWD has shown links between the ongoing review of the HBERs and the Horizontal Guidelines and the following SDGs at Target level 113 .

Source: Eurlex Policy Documents (https://knowsdgs.jrc.ec.europa.eu/policies-sdgs)

Table III below provides an overview of the SDGs and Targets to which the HBERs and the Horizontal Guidelines show a significant number of links (four links or more).

III. Overview of Sustainable Development Goals relevant to this Initiative
SDGs	Expected progress towards the Goal
SDG 9 – ‘Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation’.	Pro-competitive cooperation agreements in R&D and specialisation/production between companies operating in the EU are very likely to primarily contribute to achieve Target 9.5, i.e. enhance scientific research and upgrade the technological capabilities of industrial sectors, while encouraging innovation and substantially increasing the number of research and development workers and public and private research and development spending.
SDG 17 – ‘Strengthen the means of implementation and revitalize the global partnership for sustainable development’	Pro-competitive cooperation agreements in R&D and specialisation/production between companies operating in the EU are very likely to also contribute to achieve Target 17.6, i.e. enhance North-South, South-South and triangular regional and international cooperation on and access to science, technology and innovation, and enhance knowledge sharing on mutually agreed terms, including through improved coordination among existing mechanisms and through a global technology facilitation mechanism. Pro-competitive cooperation agreements in R&D and specialisation/production could contribute to Target 17.10, i.e. promote an universal, rules-based, open, non-discriminatory and equitable multilateral trading.
SDG 8 – ‘Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all’.	Pro-competitive cooperation agreements in R&D and specialisation/production between companies operating in the EU would likely contribute to achieve Target 8.8, i.e. protect labour rights and promote safe and secure working environments for all workers, including migrant workers, in particular women migrants and those in precarious employment Pro-competitive cooperation agreements in R&D and specialisation/production could also possibly contribute to achieve Target 8.2, i.e. achieve higher levels of economic productivity through diversification, technological upgrading and innovation, including through a focus on high-value added and labour-intensive sectors.

Annex 4: Other aspects concerned by this initiative

The evaluation has shown that there is scope in other areas of the HBERs and Horizontal Guidelines to clarify, simplify and update the rules. They are mainly of a technical nature and do not provide scope for setting out meaningful alternative policy options and can generally be addressed without altering the substance of the rules. Therefore, no policy options were identified to address these issues. Nevertheless, these issues are addressed in the initiative, i.e. the revised HBERs and Horizontal Guidelines, as described in more detail in this annex.

1.Sustainability agreements

A new chapter on sustainability agreements has been added to the Horizontal Guidelines to provide specific guidance to companies on the assessment of such agreements under Article 101 of the Treaty. The evaluation had shown that the 2011 Horizontal Guidelines did not provide sufficient legal certainty to such types of agreements and companies have argued in the broader Green Deal context that EU competition law stands in the way of this type of cooperation between companies.

The draft new chapter explains what is covered by the concept of sustainable development, by reference to the objectives in the Treaty on the European Union and the United Nations’ sustainable development goals, which include aspects that go beyond climate change and environmental protection, such as, for example, respecting human rights, fostering resilient infrastructure and innovation, reducing food waste, facilitating a shift to healthy and nutritious food, and ensuring animal welfare. The new chapter also provides a non-exhaustive list of examples of sustainability agreements that fall outside the scope of Article 101 of the Treaty because they do not affect parameters of competition such as price, quantity, quality, choice or innovation.

The chapter on sustainability agreements also includes a “soft safe harbour” for sustainability standardisation agreements. These are agreements which specify the requirements that producers, traders, manufacturers, retailers or service providers in a supply chain have to meet in relation to a possibly wide range of sustainability metrics, such as the environmental impacts of production. Such agreements can range from codes of conduct, quality marks or labels created by undertakings, to civil society organization-driven (minimum) standards and multi-stakeholder initiatives that involve undertakings across the entire value chain. Given their similarities, the safe harbour for sustainability standards is modelled on the existing safe harbour for technical standards (see the chapter of the Horizontal Guidelines on standardisation) and at the same time takes into account the specificities of sustainability standards (for example, minimum requirements/targets and related costs).

The chapter on sustainability agreements also clarifies the interaction with the other chapters of the Horizontal Guidelines, in the sense that if such agreements affect one or more parameters of competition, they need to be assessed under Article 101 taking into account both the chapter dealing with the specific type of agreement (for example, R&D, specialisation, joint purchasing, commercialisation or information exchange) and the chapter on sustainability agreements. This also means that if the parties are able to show that the main aim of their agreement is to pursue a sustainability objective, and where the overall context indicates that the agreement will not cause a sufficient degree of harm to competition to be considered a by object restriction, the agreement will be assessed by effect.

For those sustainability agreements that restrict competition within the meaning of Article 101(1) of the Treaty, the draft revised chapter also explains the scenarios in which they may fulfil the conditions of the exception provided by Article 101(3) of the Treaty and what evidence the parties to such agreements need to bring to satisfy these four cumulative conditions. The guidance follows the approach set out in the 2004 Commission Guidelines on the application of Article 101(3) of the Treaty 114 but is specifically tailored to the sustainability context.

2.Standardisation agreements and standard terms

In the chapter on standardisation agreements, the Horizontal Guidelines aim to ensure that standards are set in such a way that the specific benefits of standard setting are realised and passed on to European consumers and businesses. At the same time, the Horizontal Guidelines aim to avoid possible negative effects, such as reduced price competition, foreclosure of innovative technologies and exclusion or discrimination resulting from preventing effective access to a standard.

The standardisation chapter provides guidance on how to ensure that the process of selecting industry standards is competitive and that, once a standard is adopted, access is granted to interested users on fair, reasonable and non-discriminatory (‘FRAND’) terms. To this end, the standardisation chapter sets out the criteria under which standardisation agreements normally fall outside the prohibition of Article 101 of the Treaty (‘safe harbour’). Moreover, the chapter gives detailed guidance on standardisation agreements that do not fulfil the safe harbour criteria and clarifies that there is no presumption of illegality outside the safe harbour. The chapter also clarifies that standard-setting organisations can use unilateral disclosure provisions to ensure that the organisation and the industry have an informed choice not only on quality but also on price when selecting which technology should be included in the standard. The chapter further contains guidance and examples on standard contract terms 115 .

Both in the evaluation phase and in the consultation on the draft revised texts, the standardisation chapter raised significant interest from stakeholders.

Many of the proposed changes were welcome, in particular the proposed changes to the participation rules, which prompted mainly technical comments. For the other areas however, the comments reflect the different opinions between the holders of Standard Essential Patents (‘SEPs’) on the one hand and the implementers of standards on the other, as expected. The most pronounced differences of view concerned (i) the proposed approach to accumulated royalty rates as not being restrictive of competition, (ii) the requirement for specific disclosure of SEPs, and (iii) the proposed valuation methods for FRAND.

On accumulated royalty rates, most comments referred to the practicalities of reaching an agreement on such rate and on the possibility of a competition law infringement if such rate is determined by all stakeholders involved. The draft revised Guidelines now do not require that standard development organisations introduce an obligation on how to determine such accumulated royalty rate but simply state that – should this happen – this would generally not be considered as a restriction of competition.

The proposed changes on disclosure of standards were either welcomed by implementers of standards or met with scepticism by SEP holders, as expected. The proposed changes have been maintained, as the focus of the Guidelines is only to provide an indication of when an IPR policy does ensure effective access to the standard through an informed choice of the technology to be included, and hence can fall outside the scope of Article 101 of the Treaty.

The comments on the valuation of FRAND terms are similar to those that were received during the evaluation phase, with stakeholders proposing several different valuation methods, depending on whether they are a holder of a SEP or an implementer of a standard. Based on the feedback, some of the references have been clarified, leaving open the possibility for SEP holders and implementers to use various valuation methods.

Lastly, stakeholders reiterated concerns raised during the evaluation phase regarding the level of the value chain at which the patent holders should license. No changes have been proposed on this in the Horizontal Guidelines, but a cross-reference to the Court of Justice’s judgment in Huawei v. ZTE has been inserted; this states that a refusal by the holder of the SEP to grant a licence on FRAND terms may, in principle, constitute an abuse within the meaning of Article 102 of the Treaty. No other changes have been made on this point.

3.Information exchange

In the evaluation, stakeholders argued that the chapter on information exchange provided insufficient legal certainty. These comments found their basis in two main issues. Firstly, the chapter was not updated to the digital developments over the last 10 years and therefore lacked guidance on now common digital exchanges of information, such as data sharing and data pooling. The chapter also did not explain the relationship between the Horizontal Guidelines and other recent EU policy developments, such as the Digital Markets Act, the 2010 VBER and Vertical Guidelines and the Data Act. Secondly, the chapter was not updated to the latest case law of the Court of Justice. In addition, some NCA decisions had created uncertainty regarding the applicability of Article 101 of the Treaty to particular types of information exchange, such as the exchange of current information. Overall, stakeholders requested further examples and clarifications of the concepts used in the chapter.

The draft revised Guidelines introduced new guidance on a variety of contexts in which information exchange can occur. Compared to the current chapter, the draft revised Guidelines also give further guidance on the nature of the information exchanged and the characteristics of information exchanges that are relevant for the competition law assessment. The draft revised chapter also includes further examples and the structure of the guidance has been improved. Lastly, the draft revised chapter contains updated guidance on the case law of the Court of Justice regarding what constitutes a by object infringement and other relevant elements from recent case law dealing with information exchange.

In the consultation on the draft revised text, some stakeholders argued that the guidance on by object infringements could have a chilling effect on pro-competitive information exchanges. . However, while the case law on cartels forms an important source of guidance regarding exchanges of commercially sensitive information that are considered as an infringement by object, the revised rules will also provide further guidance on the economic and legal context that was involved in such cases. This should allow undertakings to better self-assess their agreements. Nonetheless, where exchanges of information (relating to future or current conduct or even conduct in the recent past) reduce uncertainty between competitors regarding their conduct on the market, the guidance will make clear that – depending on the legal and economic context – the exchanges may be treated as anticompetitive by object. This view is in line with that of the NCAs that replied to the consultation on the draft revised Guidelines. In addition, the wording of this chapter has been made coherent with the recently revised Vertical Guidelines regarding information exchange in dual distribution scenarios and clarifications have been inserted on exchanges resulting from regulatory requirements, such as those to be covered by the Digital Markets Act and Data Act.

4.Joint purchasing agreements

The revised chapter on joint purchasing agreements has been updated to address the lack of clarity identified during the evaluation. The chapter now provides additional insights into the types of joint purchasing arrangements covered and makes clear that the same type of assessment applies across sectors and both to actual joint purchasing and joint negotiations between buyers. In particular, it explains in more detail the distinction between genuine joint purchasing agreements and buyer cartels, in the light of the recent decisional practice of the Commission and the case law of the Court of Justice. This should provide more legal certainty to companies buying inputs together that their cooperation does not amount to a by object restriction of competition.

The chapter also refers to existing case-law on joint purchasing, pointing out that certain contractual provisions in such types of cooperation can fall outside Article 101 of the Treaty if the parties can show that they are objectively necessary. Further clarification is added on the scenario of potential upstream harm to suppliers, and the chapter sets out more clearly the factors that can play a role under Article 101(3) of the Treaty in the assessment of consumer pass-on and, in particular, on the circumstances in which it is less likely that lower prices will benefit consumers. Finally, the chapter on joint purchasing agreements has been slightly restructured to better reflect the different steps and logic in the assessment of such agreements under Article 101 of the Treaty and thereby facilitate companies’ self-assessment. This also includes adding new examples to illustrate how certain scenarios should be assessed.

5.Commercialisation agreements

The revised chapter on commercialisation agreements has been updated in particular to provide more guidance and address the lack of clarity emerged during the evaluation. A series of stakeholders asked for more guidance on some specific issues, such as the neighbouring markets where the competition assessment has to be performed, the nature of the efficiency gains to be considered in the Article 101(3) analysis, reciprocal commercialisation agreements, information exchange in commercialisation agreements, etc. These requests are addressed in the revised text and guidance is added on a series of them, where feasible within the context of the general guidelines.

During the evaluation, stakeholders requested specific guidance on bidding consortia, as the award of contracts through tendering processes are very important for the EU business environment and the current Horizontal Guidelines do not provide any useful indications. The new section has been particularly welcomed and received many comments on the basis of which a series of clarifications have been introduced in the new section. In particular, several paragraphs have been added to provide further details on restrictions by object in bidding consortia. Moreover, it is clarified that the level of financial risk induced by the project as well as the level of the investments required for the contract can be taken into account in the assessment of a party’s ability to submit a bid. However, the general approach on bidding consortia has not been changed, as it is based on the relevant case-law and on current guidelines of other competition authorities.

6.Other issues

The remaining main changes to the Horizontal Guidelines concern the introductory chapter. At the request of numerous stakeholders during the evaluation, new guidance has been introduced on the application of Article 101 of the Treaty to horizontal agreements between joint ventures and their parents. Most NCAs and other stakeholders welcomed this guidance, while some requested more specifics in the wording. This chapter also included additional guidance on the test to establish the centre of gravity of horizontal cooperation involving more than one type of agreement. This guidance was also generally supported by NCAs and other stakeholders. Finally, the introduction was updated with new case law from the Court of Justice regarding the assessment of by object infringements. Here, several stakeholders expressed reservations as they considered that the Commission applied too wide an interpretation of by object infringements.

Lastly, stakeholders welcomed the new guidance on mobile telecommunications infrastructure (network) sharing agreements. Certain stakeholders made specific comments on the exact criteria that would be relevant for the assessment and suggestions for how to amend the proposed assessment framework. This section of the text has been restructured in order to clarify which factors are relevant to assess the compatibility of a mobile infrastructure sharing agreement with Article 101 of the Treaty and which characteristics would, prima facie, make it unlikely that the agreement would restrict competition.

(1) See the Political guidelines for the Commission 2019-2024, at https://ec.europa.eu/info/sites/default/files/political-guidelines-next-commission_en_0.pdf.

(2) See also Section 6.2.6 and Annex 3 (section 3).

(3) Council Regulation (EEC) No 2821/71 of 20 December 1971 on application of Article 85 (3) of the Treaty to categories of agreements, decisions and concerted practices, OJ L 285, 29.12.1971, p. 46 as amended by Regulation (EEC) No 2743/72 of the Council of 19 December 1972, OJ L 291, 28.12.1972, p. 144.

(4) OJ L 335, 18.12.2010, p. 36. The R&D BER superseded Commission Regulation (EC) No 2659/2000 of 29 November 2000 on the application of Article 81(3) of the Treaty to categories of research and development agreements, OJ L 304, 05.12.2000, p.7, which itself superseded Commission Regulation (EEC) No 418/85 of 19 December 1984 on the application of Article 85 (3) of the Treaty to categories of research and development agreements, OJ L 053 , 22/02/1985, p. 5.

(5) OJ L 335, 18.12.2010, p. 43. The Specialisation BER superseded Commission Regulation (EC) No 2658/2000 of 29 November 2000 on the application of Article 81(3) of the Treaty to categories of specialisation agreements, OJ L 304, p. 3, which itself superseded Commission Regulation (EEC) No 417/85 of 19 December 1984 on the application of Article 85 (3) of the Treaty to categories of specialization agreements, OJ L 53, 22.2.1985, p. 1.

(6) The HBERs were originally due to expire on 31 December 2022. To allow more time to complete its review of the HBERs and take full account of the feedback to the public consultation on the draft revised regulations, the Commission adopted two regulations on 8 December 2022 extending the period of validity of the HBERs. by six months, until 30 June 2023.

(7) A false positive occurs where a block exemption covers a type of agreement that cannot be assumed to generally satisfy the conditions of Article 101(3) of the Treaty. A false negative occurs where a block exemption does not cover a type of agreement which can generally be assumed to satisfy the conditions of Article 101(3) of the Treaty (pro-competitive agreements). See also Section 6.1.1.

(8) Evaluation SWD , p. 13-14.

(9) The 2030 Agenda for Sustainable Development, with its 17 SDGs was adopted at the UN Sustainable Development Summit in September 2015.

(10) See also Section 6.2.6 and Annex 3. See, for further details, Commission’s website on EU Policies and SDGs, available at: https://knowsdgs.jrc.ec.europa.eu/policies-sdgs. Visited on 15 November 2022.

(11) Commission Notice on the definition of relevant market for the purposes of Community competition law, OJ C 372, 9.12.1997, p. 5–13.

(12) EU competition law – updating the market definition notice (revision), available at: https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/13308-EU-competition-law-updating-the-market-definition-notice-revision-_en.

(13) OJ L 102, 23.4.2010, p. 1.

(14) Guidelines on Vertical Restraints, OJ C 130, 19.5.2010, p. 1–46.

(15) Commission Regulation (EU) 2022/720 of 10 May 2022 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to categories of vertical agreements and concerted practices, OJ L 134, 11.5.2022, p. 4–13.

(16) Communication from the Commission - Commission Notice Guidelines on vertical restraints 2022/C 248/01, OJ C 248, 30.6.2022, p. 1–85.

(17) As regards the digital sector, competition law is complemented by the Digital Markets Act (Regulation (EU) 2022/1925 of the European Parliament and of the Council of 14 September 2022 on contestable and fair markets in the digital sector and amending Directives (EU) 2019/1937 and (EU) 2020/1828, OJ L 265, 12.10.2022, p. 1–66).

(18) OJ C11, 14.1.2011, p. 1.

(19) Horizontal Guidelines, paragraph 17.

(20) See footnote 6.

(21) Evaluation SWD, p. 74.

(22) Council Regulation (EEC) No 17, First Regulation implementing Articles 85 and 86 of the Treaty, OJ 13, 21.2.1962, p. 204.

(23) When assessing the compatibility of horizontal agreements that may affect trade between Member States within the meaning of Article 101 of the Treaty, NCAs and national courts are bound by the directly applicable provisions of the HBERs. The Horizontal Guidelines, which are binding on the Commission, do not bind NCAs or national courts, but they are typically taken into account when assessing the compatibility of horizontal agreements with Article 101 of the Treaty.

(24) The acronym SMEs refers to enterprises that employ fewer than 250 people and have an annual turnover not exceeding EUR 50 million and/or an annual balance sheet total not exceeding EUR 43 million. See Commission Recommendation of 6 May 2003 concerning the definition of micro, small and medium-sized enterprises, OJ L 124, 20.5.2003, p. 36-41.

(25) Evaluation Support Study, pages 13, 48, 95, 97-99 (Table 19 – R&D), 102 (Table 24 – Specialisation/production), 105, 110-111, 115-116.

(26) Evaluation Support Study, p. 97-99 (Table 19 – R&D), 102 (Table 24 – Specialisation/production).

(27) R&D co-operation may affect competition in existing markets and/or innovation competition and new products markets.

(28) Expert report on DG COMP proposals to amend the R&D Horizontal Block Exemption Regulation: A review on behalf of the publicly funded Research Organisation (PRO) & University sector, ASTP 2021, p. 7, available here: https://ec.europa.eu/competition-policy/system/files/2022-03/kd0722075enn_HBER_RDBER_and_academic_bodies.pdf .

(29) See ‘Unleashing the full potential of European SMEs’ factsheet, March 2020, available at: https://ec.europa.eu/commission/presscorner/detail/en/fs_20_426. Visited on 16 May 2022.

(30) See Expert Report on R&D cooperation agreements concluded by SMEs – Exempted under the EU R&D Block Exemption Regulation, Björn Lundqvist 2021, available here: https://ec.europa.eu/competition-policy/document/download/cb56db89-4282-4f05-afc7-859163861a93_en?filename=kd0722073enn_HBER_RDBER_and_SMEs.pdf .

(31) Annual report on European SMEs, Executive summary, p. 1, available at: https://ec.europa.eu/docsroom/documents/46062. Visited on 15 November 2022.

(32) An enterprise which employs fewer than 10 persons and whose annual turnover and/or annual balance sheet total does not exceed EUR 2 million – see the Commission Recommendation referred to in footnote 24.

(33) Annual report on European SMEs, available at: https://ec.europa.eu/docsroom/documents/46062. Visited on 16 May 2022.

(34) See ‘Unleashing the full potential of European SMEs’ factsheet, March 2020, available at: https://ec.europa.eu/commission/presscorner/detail/en/fs_20_426. Visited on 16 May 2022.

(35) See R&D ranking of top 1000 EU+UK companies (2020), available at https://iri.jrc.ec.europa.eu/scoreboard/2020-eu-industrial-rd-investment-scoreboard. Visited on 15 November 2022.

(36) See Scoreboard data – Top EU 1000 (2021), available at https://iri.jrc.ec.europa.eu/scoreboard/2021-eu-industrial-rd-investment-scoreboard. Visited on 15 November 2022.

(37) JRC Publications Repository - The 2020 EU Survey on Industrial R&D Investment Trends, p. 19 (Figure 12), available at: https://publications.jrc.ec.europa.eu/repository/handle/JRC123333. Visited on 15 November 2022.

(38) Evaluation Support Study, p. 101.

(39) Expert report on Specialisation agreements and SMEs – AEDC 2021, p. 25, available here: https://ec.europa.eu/competition-policy/system/files/2022-03/kd0722076enn_HBER_SMEs_and_specialisation_agreements.pdf.

(40) Expert report on Specialisation agreements and SMEs – AEDC 2021, p. 14.

(41) Expert report on Specialisation agreements and SMEs – AEDC 2021, p. 21.

(42) See Sections 2.1.1.1, 2.1.1.2 & 2.1.1.3.

(43) In 2020, the investment in R&D of SMEs located in the EU amounted to EUR 1.1 billion (see footnote 36). Since 10% of R&D activities (58% of 17%, see Section 2.1.1 of this report) was conducted through collaboration including SMEs, all or part of such R&D collaborations could be lost.

(44) Evaluation SWD, p. 47-48.

(45) Evaluation SWD, p. 47-48.

(46) Evaluation SWD, p. 17 et seq., 48, 61, 95.

(47) Evaluation SWD, p. 47.

(48) Expert report on Specialisation agreements and SMEs – AEDC 2021, p. 29, available here: https://ec.europa.eu/competition-policy/system/files/2022-03/kd0722076enn_HBER_SMEs_and_specialisation_agreements.pdf .

(49) Evaluation SWD, p. 49; Evaluation Support Study and Expert Report on R&D cooperation agreements concluded by SMEs – Exempted under the EU R&D Block Exemption Regulation, Björn Lundqvist 2021, available here: https://ec.europa.eu/competition-policy/document/download/cb56db89-4282-4f05-afc7-859163861a93_en?filename=kd0722073enn_HBER_RDBER_and_SMEs.pdf.

(50) Evaluation Support Study, p. 98.

(51) Evaluation Support Study, p. 97, 98 and 102.

(52) Evaluation Support Study, p. 13.

(53) Evaluation Support Study, p. 99.

(54) Evaluation Support Study, p. 102.

(55) J. Drexl, Anti-competitive stumbling stones on the way to a cleaner world: protecting competition in innovation without a market, p. 23.

(56) Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings (the Merger Regulation) (Text with EEA relevance), OJ L 24, 29.1.2004, p. 1.

(57) EU merger control relies on a notification system, whereas notifications of cooperation agreements between undertakings were abolished in 2003, in favour of the current self-assessment system.

(58) See case M.8084 - Bayer/Monsanto, decision of 21 March 2018, recital 48. See also case M.9461 - ABBVIE/ALLERGAN, decision of 10 January 2020, recital 17.

(59) In the period 2015-2017, approximately 10 of the 73 cases in which the Commission approved the concentration subject to commitments involved allegations of harm to innovation, see Nicolas Petit, Innovation Competition, Unilateral Effects and Merger Policy. Antitrust Law Journal, Vol. 82, p. 877.

(60) See case M.7932 – Dow/DuPont, decision of 27 March 2017, see in particular Annex 4 to the Commission Decision, “Implications of the economic theory on mergers, competition and innovation in light of the features of the transaction”.

(61) See case M.8084 - Bayer/Monsanto, decision of 21 March 2018, recitals 61-88.

(62) See case M.6166 - Deutsche Börse/NYSE, decision of 1 February 2012, recitals 640, 814, 861, 892, 1024, 1070 and 1128.

(63) See also Section 2.2 regarding problem drivers.

(64) See Section 1 of this report, p. 7.

(65) Communication from the Commission — Notice on agreements of minor importance which do not appreciably restrict competition under Article 101(1) of the Treaty on the Functioning of the European Union, OJ C 291, 30.8.2014, p. 1–4.

(66) See also Expert Report on R&D cooperation agreements concluded by SMEs – Exempted under the EU R&D Block Exemption Regulation, Björn Lundqvist 2021, p. 11, available here: https://ec.europa.eu/competition-policy/document/download/cb56db89-4282-4f05-afc7-859163861a93_en?filename=kd0722073enn_HBER_RDBER_and_SMEs.pdf.

(67) Communication from the Commission — Notice on agreements of minor importance which do not appreciably restrict competition under Article 101(1) of the Treaty on the Functioning of the European Union, OJ C 291, 30.8.2014, p. 1–4.

(68) Guidelines on the effect on trade concept contained in Articles 81 and 82 of the Treaty. OJ C 101, 27.4.2004, p. 81.

(69) Recital 4 of the R&D BER makes clear that the presumption that the positive effects of R&D agreements will outweigh any negative effects on competition is conditional upon the parties not exceeding a certain level of market power.

(70) Nonetheless, the 25% market share threshold condition will become applicable seven years from the date at which the products or technologies resulting from the R&D are first put on the market within the EU where the parties agree to exploit the results of the joint or paid-for R&D jointly. Furthermore, the other conditions of the R&D BER remain applicable, for example the requirement that each party be granted access to the results of the joint or paid-for R&D, as well as the BER’s lists of hardcore and excluded restrictions.

(71) See the results of the stakeholder workshop on the R&D BER summarised in Annex 2, section 8.

(72) See, for example, Evaluation SWD, p. 96.

(73) In particular, the objective of providing legal certainty, thereby making it easier for stakeholders to self-assess their agreements, and of providing a common framework of assessment for NCAs and national courts, in order to ensure consistency in the application of Article 101 of the Treaty. The objectives of the HBERs, together with the Horizontal Guidelines, are explained in more detail in Section 2.3 of the Evaluation SWD and in Section 4 below. In addition, Sections 5.2.1 and 5.2.2 of the Evaluation SWD explain how the fact that the rules do not function well or as well as they could affects their effectiveness and efficiency.

(74) Expert report on DG COMP proposals to amend the R&D Horizontal Block Exemption Regulation: A review on behalf of the publicly funded Research Organisation (PRO) & University sector, ASTP 2021, p. 4, 6 and 13., available here: https://ec.europa.eu/competition-policy/system/files/2022-03/kd0722075enn_HBER_RDBER_and_academic_bodies.pdf.

(75) Following the public consultation of 13 July 2021, the Commission considered that it would be more effective to organise a workshop to discuss with stakeholders the specific criteria under which agreements concluded by SMEs could be exempted (see Annex 2, section 5 below).

(76) See the agenda of the online Workshop on Horizontal R&D and Specialisation agreements of 21 October 2021.

(77) These access conditions are described in Section 2.1.1.2, points (i) and (ii).

(78) Expert report on Specialisation agreements and SMEs – AEDC 2021, p. 106, available here: https://ec.europa.eu/competition-policy/system/files/2022-03/kd0722076enn_HBER_SMEs_and_specialisation_agreements.pdf .

(79) See the Effect on Trade Notice, point 50.

(80) Guidelines on the effect on trade concept contained in Articles 81 and 82 of the Treaty, OJ C 101, 27.4.2004, p. 81, paragraphs 50-52.

(81) The results of the public consultation are summarised in Annex 2, sections 3 and 4.

(82) The results of this stakeholder workshop are summarised in Annex 2, section 5.

(83) For further details see section 3 of Annex 4 of this report.

(84) See Section 2 of Annex 3 of this report.

(85) See Factual summary of the contributions received in the context of the open public consultation on the evaluation of the Horizontal Block Exemption Regulations, p. 12-15, available at: https://competition-policy.ec.europa.eu/system/files/2021-03/HBERs_consultation_summary.pdf.

(86) The impact assessment included an open public consultation on the impact of the policy options and a public consultation on the draft revised rules. Participation in these consultations was voluntary and therefore, by definition, did not necessarily lead to representative results, even though the Commission reached out to the types of stakeholders that are normally underrepresented, such as micro and small stakeholders, representatives of SMEs, and consumer associations.

(87) Consumers and consumer associations only made limited contributions, as was also the case during the evaluation, in spite of the Commission having reached out to many of them to solicit their participation.

(88) See OECD Report 1996 General Cartel Bans: Criteria for Exemption for Small and Medium-sized Enterprises, https://www.oecd.org/daf/competition/cartels/1920345.pdf.

(89) Ibid.

(90) For the exemption under the R&D BER, 12 companies submitted replies (four large companies and eight SMEs). For the exemption under the Specialisation BER, eight companies submitted replies (2 large companies and six SMEs).

(91) See also Section 5.2.1 above.

(92) Expert Report on R&D cooperation agreements concluded by SMEs – Exempted under the EU R&D Block Exemption Regulation, Björn Lundqvist 2021, p. 36, available here: https://ec.europa.eu/competition-policy/document/download/cb56db89-4282-4f05-afc7-859163861a93_en?filename=kd0722073enn_HBER_RDBER_and_SMEs.pdf.

(93) Expert Report on R&D cooperation agreements concluded by SMEs – Exempted under the EU R&D Block Exemption Regulation, Björn Lundqvist 2021, p. 14, available here: https://ec.europa.eu/competition-policy/document/download/cb56db89-4282-4f05-afc7-859163861a93_en?filename=kd0722073enn_HBER_RDBER_and_SMEs.pdf.

(94) Expert report on Specialisation agreements and SMEs – AEDC 2021, p. 42, available here: https://ec.europa.eu/competition-policy/system/files/2022-03/kd0722076enn_HBER_SMEs_and_specialisation_agreements.pdf.

(95) Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions - An SME Strategy for a sustainable and digital Europe, available here: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=COM%3A2020%3A103%3AFIN.

(96) Expert report on Specialisation agreements and SMEs – AEDC 2021, p. 8, available here: https://ec.europa.eu/competition-policy/system/files/2022-03/kd0722076enn_HBER_SMEs_and_specialisation_agreements.pdf .

(97) See Expert report on DG COMP proposals to amend the R&D Horizontal Block Exemption Regulation: A review on behalf of the publicly funded Research Organisation (PRO) & University sector, ASTP 2021, p. 8, available here: https://ec.europa.eu/competition-policy/system/files/2022-03/kd0722075enn_HBER_RDBER_and_academic_bodies.pdf.

(98) See Scoreboard data – 2500 World’s top R&D investors (2021), available at https://iri.jrc.ec.europa.eu/scoreboard/2021-eu-industrial-rd-investment-scoreboard. Visited on 15 November 2022.

(99) mRNA is a type of molecule that has the ability to deliver a specific set of instructions to your cells to make pieces of protein used by certain viruses. This could induce an immune response to fight off a viral attack.

(100) See also Competition Policy for the Digital Era, a report by Jacques Crémer, Yves-Alexandre de Montjoye and Heike Schweitzer, which highlights this in particular for the digital economy and which describes innovation in the digital industries and its differences with innovation in, e.g. the pharmaceutical industry, and outlines that the benefits of innovation are achieved by being “first to the market” with a service or a product and the ability to develop a user base. Available at kd0419345enn.pdf (europa.eu).

(101) Excluding agreements from the safe harbour does not render them illegal, but, for reasons of legal certainty, companies often treat block exemptions as a set of rules to be complied with and therefore do not use agreements or restrictions that are not covered by block exemption safe harbours.

(102) See in particular Annex 2, section 7.3 (results of the public consultation on the draft revised R&D BER) and section 8 (summary of the stakeholder workshop on the revision of the R&D BER).

(103) See in particular Annex 2, section 7.3 (results of the public consultation on the draft revised R&D BER) and section 8 (summary of the stakeholder workshop on the revision of the R&D BER).

(104) See in particular Annex 2, section 7.3 (results of the public consultation on the draft revised R&D BER) and section 8 (summary of the stakeholder workshop on the revision of the R&D BER).

(105) An agreement that meets the conditions of a block exemption complies with Article 101 of the Treaty unless and until a competition authority withdraws the benefit of the block exemption.

(106) The 2021 EU industrial R&D investment scoreboard, Executive Summary, available at: https://op.europa.eu/en/publication-detail/-/publication/fb50fc5e-570e-11ec-91ac-01aa75ed71a1/language-en.

(107) The Commission notably withdrew the benefit of block exemption regulations in cases preceding the adoption of Regulation 1/2003. The Commission used its power to withdraw the benefit of previously applicable block exemption regulations in its decision of 25 March 1992 (interim measures) relating to a proceeding under Article 85 of the EEC Treaty in Case IV/34.072 – Mars/Langnese and Schöller, upheld by the judgment of 1 October 1998, Langnese-Iglo v Commission, C-279/95 P, EU:C:1998:447 and in its decision of 4 December 1991 (interim measures) relating to a proceeding under Article 85 of the EEC Treaty in Case IV/33.157 – Eco System/Peugeot.

(108) See Evaluation SWD, Section 5.1.4.

(109) Pursuant to Article 15(2) of Regulation 1/2003, Member States are required to copy to the Commission judgments of their national courts which apply Article 101 of the Treaty.

(110) Commission Notice on informal guidance relating to novel or unresolved questions concerning Articles 101 and 102 of the Treaty on the Functioning of the European Union that arise in individual cases (guidance letters), OJ C 381, 4.10.2022, p. 9–13.

(111) The Specialisation BER defines ‘unilateral specialisation agreement’ as an agreement between two parties which are active on the same product market by virtue of which one party agrees to fully or partly refrain/cease production of certain products and to purchase them from the other party, who agrees to produce and supply those products to it.

(112) Under the Horizontal Guidelines, ‘subcontracting agreements with a view to expanding production’ are agreements whereby the contractor entrusts the subcontractor with the production of a good, while the contractor does not at the same time cease or limit its own production of the good.

(113) . For further details, see Commission’s website on EU Policies and SDGs, available at: https://knowsdgs.jrc.ec.europa.eu/policies-sdgs. Visited on 15 November 2022.

(114) Communication from the Commission — Notice — Guidelines on the application of Article 81(3) of the Treaty (OJ C 101, 27.4.2004, pp. 97-118).

(115) The Horizontal Guidelines include specific paragraphs for standard contract terms, for example paragraphs 259, 260, 262, 270-272, 275-276, 300-307, etc.

Choose the experimental features you want to try