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Chapter 1 contains an introduction, which sets out the context in which Article 101 applies to horizontal cooperation agreements. This Chapter also explains the relationship between these Guidelines and other guidance, legislation and case-law affecting horizontal cooperation agreements. The guidance in Chapters 2 to 9 relating to specific types of horizontal agreements complements the more general guidance given in this introductory Chapter. It is therefore recommended to always read this Chapter first before referring to those other Chapters;

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Chapter 2 concerns research and development (‘R&D’) agreements, including guidance on the application of Commission Regulation (EU) 2023/1066 (‘R&D BER’) (3);

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Chapter 3 concerns production agreements, including guidance on the application of Commission Regulation (EU) 2023/1067 (‘Specialisation BER’) (4);

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Chapter 4 concerns purchasing agreements;

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Chapter 5 concerns commercialisation agreements;

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Chapter 6 concerns information exchange;

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Chapter 7 concerns standardisation agreements;

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Chapter 8 concerns standard terms.

(a)

the centre of gravity of a horizontal cooperation agreement involving both joint R&D and joint production (or joint distribution) of the results is generally the joint R&D, on condition that the joint production (or joint distribution) only takes place if the joint R&D is successful. Where the results of the joint R&D are decisive for the subsequent joint production (or joint distribution), the guidance in the Chapter on R&D agreements prevails. The centre of gravity of the cooperation would be different if the parties would have engaged in the joint production (or joint distribution) in any event, that is to say, irrespective of the joint R&D. In that case, the cooperation should instead be assessed as a joint production (or joint commercialisation) agreement, and the guidance in the Chapter on production (or joint commercialisation) agreements prevails. If the agreement provides for full integration of the parties’ activities in the area of production and only a partial integration of some R&D activities, the centre of gravity of the cooperation would be the joint production;

(b)

the centre of gravity of a horizontal cooperation agreement involving both specialisation in production and joint commercialisation of the resulting products is generally the specialisation, as the joint commercialisation generally only takes place as a consequence of the specialisation;

(c)

the centre of gravity of a horizontal cooperation agreement involving joint production and joint commercialisation of the resulting products is generally the joint production, as the joint commercialisation generally only takes place as a consequence of the joint production.

(a)

agreements between parent companies to create a joint venture;

(b)

agreements between parent companies to modify the scope of their joint venture;

(c)

agreements between parent companies and their joint venture concerning products or geographies in which the joint venture is not active; and

(d)

agreements between parent companies not involving their joint venture, even if the agreement concerns products or geographies in which the joint venture is active.

(a)

if the undertaking has a firm intention and an inherent ability to enter the market within a short period of time and does not face barriers to entry that are insurmountable (16);

(b)

whether the undertaking has taken sufficient preparatory steps to enable it to enter the market concerned;

(c)

the real and concrete possibilities of the undertaking that is not yet active to enter that market and compete with one or more of the other undertakings - the purely hypothetical possibility to enter a market or even the mere wish or desire are not sufficient;

(d)

the structure of the market and the economic and legal context within which it operates (17);

(e)

the perception of an undertaking that is established on the market is a factor that is relevant to the assessment of the existence of a competitive relationship between that party and an undertaking outside the market since, if the latter is perceived as a potential entrant to the market, it may, by reason merely that it exists, exert competitive pressure on the undertaking that is established in the market.

(a)

the content of the agreement,

(b)

the objectives it seeks to attain, and

(c)

the economic and legal context of which it forms part.

(a)

the nature of the goods or services affected, and

(b)

the real conditions of the functioning and structure of the market or markets in question (33).

(a)

the nature and content of the agreement;

(b)

the actual context in which the cooperation occurs, in particular the economic and legal context in which the undertakings concerned operate, the nature of the goods or services affected, and the real conditions of the functioning and the structure of the market or markets in question (39);

(c)

the extent to which the parties individually or jointly have or obtain some degree of market power (40) and the extent to which the agreement contributes to the creation, maintenance or strengthening of that market power or allows the parties to exploit such market power;

(d)

the restrictive effects on competition may be actual and potential, but they must, in any event, be sufficiently appreciable (41).

(a)

the agreement must lead to efficiency gains, that is to say, it must contribute to improving the production or distribution of products or contribute to promoting technical or economic progress;

(b)

the restrictions must be indispensable to the attainment of those objectives, that is to say, of those efficiency gains;

(c)

consumers must receive a fair share of the resulting benefits, that is to say, the efficiency gains, including qualitative efficiency gains, attained by the indispensable restrictions must be sufficiently passed on to consumers such that the consumers are at least compensated for the restrictive effects of the agreement. Hence, efficiencies only accruing to the parties to the agreement will not suffice. For the purposes of these Guidelines, ‘consumers’ are the customers of the parties to the agreement and subsequent purchasers (48);

(d)

the agreement must not afford the parties the possibility of eliminating competition in respect of a substantial part of the products in question.

(a)

the aggregate market share of the parties on any relevant market within the Union affected by the agreement does not exceed 5 %, and

(b)

the aggregate annual Union turnover of the undertakings concerned in the products covered by the agreement does not exceed EUR 40 million (54). In the case of agreements concerning the joint buying of products, the relevant turnover is the parties’ combined purchases of the products covered by the agreement.

(a)

Section 2.2 provides guidance on the application of the R&D BER, including the conditions for exempting R&D agreements, the thresholds, and the hardcore and excluded restrictions;

(b)

Section 2.3 provides guidance on the individual assessment of R&D agreements under Article 101(1);

(c)

Section 2.4 provides guidance on the individual assessment of R&D agreements under Article 101(3);

(d)

Section 2.5 provides guidance on the relevant time period for the assessment of R&D agreements;

(e)

Section 2.6 provides examples of hypothetical R&D agreements, together with guidance on their competitive assessment.

(a)

joint R&D of contract products or contract technologies, which may or may not include joint exploitation of the results of that R&D; or

(b)

paid-for R&D of contract products or contract technologies, which may or may not include joint exploitation of the results of that R&D; or

(c)

joint exploitation of the results of R&D of contract products or contract technologies carried out pursuant to a prior agreement pursuing joint R&D (as defined in point (a) above) between the same parties; or

(d)

joint exploitation of the results of R&D of contract products or contract technologies carried out pursuant to a prior agreement pursuing paid-for R&D (as defined in point (b) above) between the same parties.

(a)

‘contract product’ (77) means a product arising out of the joint or paid-for R&D or produced by applying the contract technologies. ‘Product’ means a good or a service, including both intermediary goods and services as well as final goods and services (78);

(b)

‘contract technology’ (79) means a technology or process arising out of the joint or paid-for R&D.

(a)

the R&D activities are carried out by a joint team, organisation or undertaking;

(b)

the parties jointly entrust a third party with the R&D activities (81); or

(c)

the parties allocate the activities between them by way of ‘specialisation in the context of R&D’. This means that each of the parties is involved in the R&D activities and they divide the R&D work between them in any way that they consider appropriate. This does not include paid-for R&D (82).

(a)

indispensable for the production of the contract products or the application of the contract technologies; and

(b)

protected by intellectual property rights or constitute know-how (84).

(a)

The exploitation can be carried out together by the parties in a joint team, joint organisation or joint undertaking;

(b)

The parties can jointly entrust a third party with the exploitation work (87);

(c)

The parties can allocate the work between them by way of specialisation in the context of exploitation, which means that (88):

(a)

conducting further research and development; and

(b)

exploiting the results of the R&D.

(a)

First, where the R&D agreement is concluded with one or more of the following categories of undertaking and those undertakings agree to use the results of the R&D only for further research (and not for exploitation). These categories of undertaking are:

(b)

Second, the parties may agree to restrict their right to exploit the R&D results in accordance with the R&D BER, in particular where they agree to specialise in the context of exploitation. For example, where the R&D agreement provides for specialisation in the context of exploitation, the parties may impose restrictions upon each other regarding the exploitation of the results in certain territories, fields of use or vis-à-vis certain customers).

(a)

an actual competitor is an undertaking that is supplying a product, technology or process capable of being improved, substituted or replaced by the contract product or contract technology on the relevant geographic market;

(b)

a potential competitor is an undertaking that, in the absence of the R&D agreement, would, on realistic grounds and not just as a mere theoretical possibility, be likely to undertake, within not more than three years, the necessary additional investments or incur the necessary costs to supply a product, technology or process capable of being improved, substituted or replaced by the contract product or contract technology on the relevant geographic market.

(a)

for R&D agreements involving joint R&D, the combined market share of the parties to the agreement must not exceed 25 % on the relevant product and technology markets (108);

(b)

for R&D agreements involving paid-for R&D, the same market share threshold of 25 % applies, but the combined market share must take into account the market share of the financing party and the market shares of all undertakings with which the financing party has entered into R&D agreements relating to the same contract products or contract technologies (109).

(a)

where only one party meets the definition of actual or potential competitor set out in Article 1(1), point (15) of the R&D BER;

(b)

where the R&D agreement concerns 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, for example a vaccine to protect against a virus for which no vaccine existed previously;

(c)

where the R&D agreement concerns innovation efforts that are, at the time when the R&D agreement is entered into, not yet closely related to a specific product or technology.

(i)

a field unconnected with that to which the R&D agreement relates;

(ii)

the field to which the R&D agreement relates or in a connected field after the completion of the joint or paid-for R&D.

(i)

the setting of production targets where the R&D agreement provides for the joint exploitation of the R&D results and the joint exploitation includes the joint production of the contract products (120);

(ii)

the setting of sales targets where the joint exploitation of the R&D results (1) includes the joint distribution of the contract products or the joint licensing of the contract technologies, and (2) is carried out by a joint team, organisation or undertaking or is jointly entrusted to a third party (121);

(iii)

practices constituting specialisation in the context of exploitation, such as restrictions imposed upon the parties regarding the exploitation of the R&D results in relation to certain territories, customers or fields of use (122);

(iv)

certain non-compete obligations (123), namely the restriction of the freedom of the parties to produce, sell, assign or license products or technologies which compete with the contract products or contract technologies during the period for which the parties have agreed to jointly exploit the results.

(i)

passive sales (125) as those made in response to unsolicited requests from individual customers, including delivery of products to customers, without the sale having been initiated by actively targeting the particular customer, customer group or territory, and including sales resulting from participating in public procurement or responding to private invitations to tender;

(ii)

active sales (126) as all forms of selling other than passive sales. This includes actively targeting customers by visits, letters, emails, calls or other means of direct communication or through targeted advertising and promotion, offline or online, for instance by means of print or digital media, including online media, price comparison services or advertising on search engines targeting customers in particular territories or customer groups, operating a website with a top-level domain corresponding to particular territories, or offering on a website languages that are commonly used in particular territories, where such languages are different from the ones commonly used in the territory in which the buyer is established.

(a)

after completion of the R&D, the validity of intellectual property rights which the parties hold in the internal market and which are relevant to the R&D (128); or

(b)

after the expiry of the R&D agreement, the validity of intellectual property rights which the parties hold in the internal market and which protect the results of the R&D (129).

(a)

the existence of the R&D agreement substantially restricts the scope for third parties to carry out R&D in fields related to the contract products or contract technologies; this could be due, for example, to the limited available research capacity;

(b)

the existence of the R&D agreement substantially restricts the access of third parties to the relevant market for the contract products or contract technologies, for example, as a result of the grant of an exclusive licence to one of the parties to produce and distribute the contract products or contract technologies;

(c)

the parties do not exploit the results of the joint or paid-for R&D vis-à-vis third parties without any objectively valid reason, for example by refusing to license the results of the R&D;

(d)

the products or technologies resulting from the R&D agreement are not subject in the whole or a substantial part of the internal market to effective competition;

(e)

the existence of the research and development agreement would substantially restrict innovation competition or competition in research and development in a particular field. This may occur, for example, in cases where the contract products or contract technologies would create an entirely new demand and where at the time the agreement is entered into there is a low number of comparable independent research and development projects in the same field.

(a)

combining complementary skills and assets of the parties, thus resulting in a more rapid development and marketing of improved or new products and technologies than without the cooperation;

(b)

leading to a wider dissemination of knowledge, which may trigger further innovation;

(c)

giving rise to cost reductions or reducing dependencies in the case of products or technologies for which there are a limited number of suppliers.

(i)

Restriction of competition within the meaning of Article 101(1): The R&D agreement would result in Company B abandoning the development of its prototype component, which it would otherwise have been likely to bring to market in approximately 18 months. At the time when Companies A and B enter into the R&D agreement, they are the only undertakings engaged in R&D in relation to the miniaturised electronic component, and no other undertaking is developing a substitutable component. Moreover, the companies are at a late stage of the R&D process (they expect to bring the component to market in approximately 18 months) and through the agreement both companies could avoid a race to be the first one to reach the market, reducing the risk of not being able to recoup all or part of the investment they have already made. Therefore, the R&D agreement appears likely to restrict innovation competition within the meaning of Article 101(1). This conclusion is not altered by the fact that each party will commercialise the new component independently.

(ii)

Non-fulfilment of the conditions of Article 101(3): The joint venture will enable the parties to bring the new component to market more quickly, which is an objective efficiency that is capable of benefitting consumers. However, this time saving is unlikely to outweigh the reduction in innovation competition and product variety resulting from the abandonment of Company B’s prototype, given that it is likely that B’s product would otherwise have been brought to the market before, or at the very latest, within a short period after A’s product and the parties do not face any other competitive constraint at innovation level. Therefore, it appears that the R&D agreement does not fulfil at least one of the four cumulative conditions of Article 101(3), namely the fair share for consumers. In that scenario, the benefit of the block exemption is likely to be withdrawn, as provided for by Article 10 of the R&D BER, and the agreement is likely to be prohibited on the grounds that it infringes Article 101.

(a)

they may provide that production is carried out jointly, for example by way of a joint venture, a joint team or a joint organisation; or

(b)

they may provide that production is carried out by only one party or by two or more parties, by way of looser forms of cooperation, such as subcontracting agreements.

(a)

Section 3.2 provides guidance on the identification of markets that are relevant for the assessment of production agreements;

(b)

Section 3.3 provides guidance on the application of the Specialisation BER, including the conditions for exempting specialisation agreements, the market share threshold, and the hardcore and excluded restrictions;

(c)

Section 3.4 provides guidance for the individual assessment of production agreements under Article 101(1);

(d)

Section 3.5 provides guidance for the individual assessment of production agreements under Article 101(3);

(e)

Section 3.6 provides specific guidance for the assessment of mobile telecommunications infrastructure sharing agreements under Article 101(1) and Article 101(3).

(a)

the agreement involves two or more parties;

(b)

the parties to the agreement are already active on the same product market;

(c)

one or more parties agree to fully or partly cease or refrain from producing certain products and to purchase them from one or more of the other parties; and

(d)

a different party or parties agree to produce and supply those products to the other party or parties that cease or refrain from producing them.

(a)

the agreement involves two or more parties;

(b)

the parties to the agreement are already active on the same product market;

(c)

two or more parties, on a reciprocal basis, agree to fully or partly cease or refrain from producing certain but different products and to purchase those products from one or more of the other parties; and

(d)

one or more of the other parties agree to produce and supply those products to the parties that cease or refrain from producing them.

(a)

the agreement involves two or more parties; and

(b)

the parties agree to produce certain products jointly.

(a)

they are directly related to and necessary for the implementation of the specialisation agreement; and

(b)

they do not constitute the primary object of the agreement.

(a)

An exclusive supply obligation means an obligation not to supply the specialisation products to a competing undertaking other than a party or parties to the agreement (see Article 1(1), point (10) of the Specialisation BER). Specialisation products mean the products produced under a specialisation agreement (see Article 1(1), point (6) of the Specialisation BER).

(b)

An exclusive purchase obligation means an obligation to purchase the specialisation products only from a party or parties to the agreement (see Article 1(1), point (11) of the Specialisation BER).

(a)

distribution carried out by a joint team, joint organisation or joint undertaking, or

(b)

distribution undertaken by a third party distributor that meets two cumulative conditions:

(a)

The parties’ combined market share does not exceed 20 % on the relevant market(s) to which the specialisation products belong.

(b)

Where the specialisation products are intermediary products that are fully or partly used captively by one or more of the parties as inputs for the production of certain downstream products, which the parties also sell, the exemption provided by the Specialisation BER is conditional upon:

(a)

the fixing of prices when selling the specialisation products to third parties;

(b)

the limitation of output or sales; and

(c)

the allocation of markets or customers.

(a)

Fixing of prices. In the context of joint distribution, the Specialisation BER allows the fixing of prices charged to immediate customers (Article 5(a)).

(b)

Limitation of output or sales.

(a)

the individual market positions of other market participants;

(b)

links between other market participants created by parallel specialisation agreements;

(c)

links between the parties and other market participants.

(a)

a direct limitation of competition between the parties;

(b)

coordination of the parties’ competitive behaviour as suppliers; or

(c)

anti-competitive foreclosure of third parties in a spill-over market.

(a)

the parties have market power; and

(b)

factors conducive to such coordination are present, such as:

(a)

the parties agree on the output directly concerned by the production agreement (for example, the capacity and production volume of a joint venture or the agreed amount of outsourced products), provided that competition on other parameters (for example, prices) is not eliminated; or

(b)

a production agreement that also provides for the joint distribution of the jointly produced products provides for joint setting of the sales prices of those products, and only those products, provided that the restriction is objectively necessary for the implementation of the combined production and distribution agreement and proportionate to attain the objectives of that agreement.

(a)

whether the parties to the agreement are actual or potential competitors (165);

(b)

the situation that would prevail in the absence of the agreement, including any restrictions it contains;

(c)

the characteristics of the relevant market and whether the parties to the agreement have market power;

(d)

the nature and scope of the cooperation;

(e)

the products concerned by the cooperation.

(a)

production agreements between undertakings that are not actual or potential competitors. Such agreements are generally only capable of restricting competition where they include provisions that foreclose competition from third parties;

(b)

production agreements that enable the parties to launch a product that, on the basis of objective factors, they would not otherwise have been able to produce (for example, due to their technical capabilities) and which do not lead to a collusive outcome in respect of other products for which the parties compete;

(c)

production agreements that affect markets in which the parties do not have market power (166), including agreements which benefit from the De Minimis Notice (167).

(a)

The parties to a production joint venture may agree to limit the output of the joint venture compared to the output that they would have put on the market if each of them had decided their output independently;

(b)

Where the main product characteristics are determined by the production agreement, this may eliminate competition between the parties on key parameters (for example, quality and/or range of products or innovation), irrespective of whether the agreement also involves joint distribution. This concern is particularly relevant in industries where production is the main economic activity, such as manufacturing industries or food processing;

(c)

A joint venture that charges a high transfer price to the parties could increase their input costs, which could lead to higher downstream prices. Third party competitors may find it profitable to increase their prices as a response, thereby contributing to price increases in the relevant market.

(a)

enabling undertakings to save costs that otherwise they would duplicate;

(b)

helping undertakings to improve product quality by combining complementary skills and know-how;

(c)

enabling undertakings to increase product variety, which they otherwise could not have afforded, or would not have been able to achieve;

(d)

enabling undertakings to improve production technologies or launch new products (such as sustainable products), which they would otherwise not have been able to do (for example, due to their technical capabilities);

(e)

incentivising and enabling undertakings to adapt their production capacities to a sudden surge in demand or drop in supply of certain products, which can result in shortages;

(f)

enabling undertakings to produce at lower cost, in cases where the cooperation enables the parties to increase production and where marginal costs decline with output, namely, to achieve economies of scale;

(g)

providing cost savings by means of economies of scope, if the agreement allows the parties to increase the number of different types of products that they produce.

(a)

the type and depth of sharing (including the degree of independence retained by the mobile telecommunications network operators) (191);

(b)

the scope of the shared services and shared technologies, the purpose of the (spectrum) sharing, the duration and the structure of the cooperation put in place by the agreements;

(c)

the geographic scope and the market coverage of the NSA (for example, the population coverage and whether the agreement concerns densely populated areas) (192);

(d)

the characteristics and structure of the relevant market (market shares of the parties, amount of spectrum held by the parties, closeness of competition between the parties, number of operators outside the agreement and extent of the competitive pressure exerted by them, barriers to entry, agreements with third parties (such as third party owners of components of network infrastructure or third party service providers, for instance, providers of towering services));

(e)

the number of NSAs in the relevant market and the number and identity of participating network operators.

(a)

The participating operators each control and operate their own core network and there are no technical, contractual, financial or other disincentives that prevent each operator from implementing unilaterally any infrastructure deployments and upgrades that it wishes to implement;

(b)

The participating operators maintain independent retail and wholesale operations (technical and commercial decision-making independence). This includes the freedom to set prices for their services, to determine the product/bundle parameters and to differentiate their services based on quality and other parameters;

(c)

The participating operators maintain the ability to follow independent spectrum strategies (193);

(d)

The participating operators do not exchange commercially sensitive information other than that which is strictly necessary for the mobile infrastructure sharing to function and, where necessary, barriers to information exchange have been put in place.

(a)

Passive sharing agreements (195) are unlikely to give rise to restrictive effects on competition, provided that (i) the network operators maintain a significant degree of independence and flexibility in defining their commercial strategy, the characteristics of their services and their network investments and (ii) access to passive infrastructure in the relevant market is not restricted (in this respect, relevant factors to be considered are, for example, regulatory obligations or existing commercial arrangements limiting such access);

(b)

Active sharing agreements (196) are more likely to give rise to restrictive effects on competition. This is because, compared to passive sharing, active sharing generally involves more extensive cooperation on components of the network that are likely to affect not only coverage but also independent deployment of capacity;

(c)

Spectrum sharing agreements (also referred to as ‘spectrum pooling’) are a more far-reaching form of cooperation and may further restrict the parties’ ability to differentiate their retail and/or wholesale offers and directly limit competition between them (197). While the sharing of radio spectrum may be permitted by regulatory authorities when they grant rights to use radio spectrum, (198) these agreements require a more careful Article 101 assessment than other forms of network sharing (199).