(1)

Regulation (EEC) No 2821/71 empowers the Commission to apply Article 101(3) of the Treaty on the Functioning of the European Union (*1) by regulation to certain categories of agreements, decisions and concerted practices falling within the scope of Article 101(1) of the Treaty which have as their object specialisation, including agreements necessary for achieving such specialisation.

(2)

Commission Regulation (EC) No 1218/2010 (2) defines categories of specialisation agreements which the Commission regarded as normally satisfying the conditions laid down in Article 101(3) of the Treaty. In view of the overall positive experience with the application of that Regulation, which expires on 31 December 2022, and taking into account the results of the review procedure, it is appropriate to adopt a new block exemption regulation.

(3)

This Regulation should meet the two requirements of (i) ensuring effective protection of competition and (ii) providing adequate legal security for undertakings. The pursuit of those objectives should take account of the need to simplify administrative supervision and the legislative framework to as great an extent as possible.

(4)

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

(5)

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

(6)

The benefit of the exemption established by this Regulation should be limited to those agreements for which it can be assumed with sufficient certainty that they satisfy the conditions of Article 101(3) of the Treaty.

(7)

Specialisation agreements are most likely to contribute to improving the manufacture of goods or the preparation of services or their distribution, if the parties have complementary skills, assets or activities, because they can concentrate on the manufacture of those goods or the preparation of those services and thus operate more efficiently and supply the products more cheaply. Given effective competition, it is likely that consumers will receive a fair share of the resulting benefits.

(8)

Such advantages can arise from: (a) agreements whereby a party or parties fully or partly gives up the manufacture of certain goods or the preparation of certain services in favour of another party or parties (‘unilateral specialisation’); (b) agreements whereby each party fully or partly gives up the manufacture of certain but different goods or the preparation of certain services in favour of another party or parties (‘reciprocal specialisation’) and (c) agreements whereby two or more parties undertake to jointly manufacture certain goods or prepare certain services (‘joint production’).

(9)

The application of this Regulation to services concerns the preparation of services (as opposed to the provision of services). The preparation of services refers to activities upstream of the provision of services to customers (for example, cooperation in the creation of a platform through which a service will be provided). The provision of services falls outside the scope of this Regulation, except in the context of distribution in which the parties provide the services prepared and the products manufactured under the specialisation agreement.

(10)

The application of this Regulation to unilateral and reciprocal specialisation agreements should be limited to scenarios where the parties are active on the same product market. However, it is not necessary for the parties to be active on the same geographic market. In addition, the concepts of unilateral and reciprocal specialisation do not require a party to reduce capacity, as it is sufficient if they reduce their production volumes.

(11)

To ensure that the benefits of specialisation will materialise without one party leaving the market downstream of production entirely, unilateral and reciprocal specialisation agreements should only be covered by this Regulation where they provide for supply and purchase obligations. Supply and purchase obligations may, but do not have to, be of an exclusive nature.

(12)

This Regulation applies to joint production agreements entered into by parties who are already active on the same product market but also by parties who wish to enter a product market by way of the joint production agreement. In addition, the concept of joint production agreement does not require the parties to reduce their individual activities regarding the manufacture of goods or preparation of services outside the scope of their envisaged joint arrangement.

(13)

It can be presumed that, where the parties’ share of the relevant market for the products which are the subject matter of a specialisation agreement does not exceed a certain level, the agreements will, as a general rule, 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.

(14)

Where the products covered by a specialisation agreement are intermediary products which one or more of the parties fully or partly use as an input for their own downstream products which they subsequently sell on the market, the exemption conferred by this Regulation should also be conditional on the parties’ share on the relevant market for these downstream products not exceeding a certain level. In such a case, merely looking at the parties’ market share at the level of the intermediary product would ignore the potential risk of foreclosing or increasing the price of inputs for competitors at the level of the downstream products.

(15)

There is no presumption that specialisation agreements are either caught by Article 101(1) of the Treaty or that they fail to satisfy the conditions of Article 101(3) of the Treaty once the market share threshold set out in this Regulation is exceeded or other conditions of this Regulation are not met. In such cases, an individual assessment of the specialisation agreement needs to be conducted under Article 101 of the Treaty.

(16)

This Regulation should not exempt agreements containing restrictions which are not indispensable to the attainment of the positive effects generated by a specialisation agreement. In principle, agreements containing certain types of severe restrictions of competition relating to the fixing of prices charged to third parties, limitation of output or sales, and allocation of markets or customers should be excluded from the benefit of the exemption established by this Regulation irrespective of the market share of the parties.

(17)

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

(18)

The benefit of this Regulation may be withdrawn pursuant to Article 29 of Council Regulation (EC) No 1/2003 (3).

(19)

In order to facilitate the conclusion of specialisation agreements, which can have a bearing on the structure of the parties, the period of validity of this Regulation should be fixed at 12 years.

(1)

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

(2)

Article 179(2) of the Treaty calls upon the Union to encourage undertakings, including small and medium-sized undertakings, in their research and technological development activities of high quality, and to support their efforts to cooperate with one another.

(3)

Commission Regulation (EU) No 1217/2010 (2) defines categories of research and development agreements that the Commission regarded as normally satisfying the conditions laid down in Article 101(3) of the Treaty. In view of the overall positive experience with the application of that Regulation, which expires on 31 December 2022, and taking into account the results of the review procedure, it is appropriate to adopt a new block exemption regulation.

(4)

This Regulation intends to facilitate research and development while at the same time effectively protecting competition. This Regulation should also meet the requirement of providing adequate legal security for undertakings. The pursuit of those objectives should take account of the need to simplify administrative supervision and the legislative framework to as great an extent as possible.

(5)

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

(6)

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

(7)

Agreements on the joint execution of research work or the joint development of the results of the research, up to but not including the stage of industrial application, generally do not fall within the scope of Article 101(1) of the Treaty. In certain circumstances, however, such as where the parties agree not to carry out other research and development in the same field, thereby forgoing the opportunity of gaining competitive advantages over the other parties, such agreements may fall within Article 101(1) of the Treaty and should therefore be included within the scope of this Regulation.

(8)

The benefit of the exemption established by this Regulation should be limited to those agreements for which it can be assumed with sufficient certainty that they satisfy the conditions of Article 101(3) of the Treaty.

(9)

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

(10)

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

(11)

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

(12)

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

(13)

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

(14)

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

(15)

Where the research and development agreement does not provide for any joint exploitation of the results, the parties should agree in the research and development agreement to grant each other access to their respective pre-existing know-how, as long as this know-how is indispensable for the purposes of the exploitation of the results by the other parties. The compensation (e.g. rates of any licence fee) charged should not be so high as to effectively impede access to the know-how by the other parties.

(16)

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

(17)

The exemption established by this Regulation should also be limited to research and development agreements that do not afford the undertakings the possibility of eliminating competition in innovation, including the development of new products or technologies. It is necessary to exclude research and development agreements from the block exemption where there would remain less than three competing R&D efforts in addition to and comparable with those of the parties to the R&D agreement.

(18)

However, there is no presumption that research and development agreements are either caught by Article 101(1) of the Treaty or that they fail to satisfy the conditions of Article 101(3) of the Treaty once the thresholds or other conditions set out in this Regulation are not met. In such cases, an individual assessment of the research and development agreement needs to be conducted under Article 101 of the Treaty.

(19)

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

(20)

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

(21)

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

(22)

The possibility cannot be ruled out that anti-competitive foreclosure effects may arise where one party finances several research and development projects carried out by competitors with regard to the same contract products or contract technologies, in particular where it obtains the exclusive right to exploit the results vis-à-vis third parties. Therefore, the benefit of this Regulation should be conferred on such paid-for research and development agreements only if the combined market share of all the parties involved in the connected agreements, that is to say, the financing party and all the parties carrying out the research and development, does not exceed 25 %.

(23)

The benefit of this Regulation may be withdrawn pursuant to Article 29 of Council Regulation (EC) No 1/2003 (3).

(24)

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