On 4 May, the European Commission published its draft guidelines on horizontal cooperation and draft block exemptions on R&D and specialisation agreements, which will replace the existing guidelines and regulations as of 1 January 2011.   

All interested parties are invited to submit their observations.

What you need to know

The package under review contains three texts, namely two block exemption regulations (on R&D and specialisation agreements) and the guidelines on horizontal cooperation. The block exemptions declare compatible with EU competition rules certain R&D and specialisation agreements, provided (i) certain market share thresholds are met, and (ii) they do not contain so-called hardcore restrictions. The guidelines contain guidance on a variety of coordination tools between competitors such as joint commercialisation and selling agreements, joint production agreements and joint purchasing agreements.

Crucially, the draft guidelines provide more extensive guidance and now also include a section on information exchange and a more detailed section on agreements on standards.  

Standards

The section on standards has been considerably revised, taking into account recent experience such as commitments accepted from Rambus or the recently closed case against Qualcomm. The Commission now makes clear that prior disclosure of the maximum terms that a company would charge (including maximum royalty rates) if its technology were incorporated in a standard is unlikely to raise competition issues. The Commission also clarifies the procedure which standard-setting organisations should apply; in particular the existence of any essential IP right must be disclosed and a FRAND commitment must be offered, in order to avoid so-called patent ambushes.

The Commission also targets agreements on commercial standard terms. Such agreements are often found in sectors such as insurance, banking or energy and may breach competition law where they limit innovation, increase prices or deny access to new entrants.

Information Exchange

The previous guidelines did not contain any guidance on information exchange. The Commission now clarifies that the exchange of individualised information on future conduct (in particular, future prices and quantities) will almost invariably breach competition law,  even where that conduct does not influence prices charged to final consumers, in line with the recent ruling by the Court of Justice in T-Mobile.

Other types of information exchange, such as industry benchmarking, must be assessed on a case by case basis in order to ascertain whether collusion is facilitated.

R&D Agreements

The Commission is concerned that parties could use their existing IP rights to prevent their R&D partners from exploiting the product of their joint research.

To this end, the draft text mandates prior disclosure by the parties of existing or pending IP rights which may affect the exploitation of the product resulting from the R&D. Similarly, where joint research is conducted without joint exploitation, the agreement must stipulate that any pre-existing know-how which is indispensable for the exploitation of the results must be transferred to the other party.

What you need to do

• Make your views known! Stakeholders are invited to submit comments on the draft texts to the European Commission. If you have any particular points to make,
• Anticipate changes in the rules concerning R&D and Specialisation Agreements by identifying any such agreements within your company, and the impact of the new rules on these.

If you own IP rights related to a standard, ensure you are able to enforce your rights without falling foul of competition rules.