Block Exemption Regulation Overview

The Block Exemption Regulation is a set of rules that applies to certain agreements between companies. It's designed to promote competition and prevent anti-competitive practices.

The regulation was first introduced in 2003 and has been updated several times since then. The most recent update was in 2010.

The main goal of the Block Exemption Regulation is to allow companies to collaborate on certain activities without having to apply for individual exemptions. This can help to reduce administrative burdens and make it easier for companies to work together.

Horizontal cooperation agreements are subject to guidelines that determine their applicability to Article 101 of the Treaty on the Functioning of the European Union.

The 2010 Horizontal Block Exemption Regulations expired on June 30, 2023, and were reviewed before their expiry, along with the 2011 Horizontal Guidelines.

A horizontal cooperation agreement will not restrict competition if it allows parties to participate in projects they couldn't undertake individually.

The Horizontal Regulations are a set of guidelines that help businesses understand how to cooperate with each other without breaking competition laws. They provide a safe harbor for certain types of agreements, such as research and development agreements and specialisation agreements.

The 2010 Horizontal Block Exemption Regulations expired on June 30, 2023, and were replaced by revised regulations and guidelines. This change aims to provide more precise and up-to-date guidance for businesses.

Companies can find the texts of the 2010 R&D Block Exemption Regulation, the 2010 Specialisation Block Exemption Regulation, and the 2011 Horizontal Guidelines on the European Commission's website. These documents are a valuable resource for anyone looking to understand the Horizontal Regulations.

The revised Horizontal Guidelines, published in July 2023, provide expanded guidance on the competitive assessment of information exchange. This includes concepts such as genuinely public information, aggregating information/data, unilateral disclosure, and indirect exchanges.

Chapter 6 of the Guidelines sets out a helpful self-assessment flow chart and an indicative table to assist companies in self-assessing liability for exchanges of information.

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Bidding consortia can be a complex issue, but here's the key thing to know: they're not automatically illegal if bidders cooperate in a public or private procurement tender.

A bidding consortium is different from a bid rigging cartel, which is when competitors collude to cheat the system. A consortium, on the other hand, is a group of bidders working together to undertake projects they couldn't do alone.

The key to a consortium being legal is that it allows parties to participate in projects they wouldn't be able to handle individually. This is the main point of a consortium, after all! If bidders are just trying to limit competition, that's not what it's about.

The Guidelines discuss various scenarios of cooperation and the risks of bidders integrating their resources and activities in a way that's not allowed.

R&D agreements have undergone changes under Commission Regulation (EU) 2023/1066, which came into effect on 1 June 2023.

This regulation established new conditions for exemption, which will be applied to agreements in force on 30 June 2023 that don't meet the previous conditions. A transitional regime will be in place until 30 June 2025 to allow companies to adapt to the new rules.

For R&D agreements, the focus is on protecting competition in innovation. The regulation aims to promote cooperation while preventing anti-competitive practices.

R&D agreements that were in force on 30 June 2023 but don't meet the new conditions may still be exempt under Regulation (EU) No 1217/2010.

For another approach, see: Regulation D (FRB)

Technology Transfer Standard Clauses are a crucial part of horizontal cooperation agreements. They provide a framework for the transfer of technology between companies.

Active Sales means actively approaching individual customers or marketing/advertising directly to specific customer groups, or customers in a particular territory in order to make sales. This can be a key aspect of a technology transfer agreement.

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Contract Products are goods and/or services produced with the Licensed Technology. Companies need to clearly define what these products are in their agreement.

Exclusive Customer Groups are defined in a schedule, with the relevant exclusive customers identified therein. This means that certain customers are off-limits to other companies involved in the agreement.

The Exclusive Term is also defined in a schedule, indicating how long the exclusivity lasts. Companies should carefully consider this term when negotiating their agreement.

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The Vertical Restraints block exemption is a regulation that sets out the conditions under which certain vertical agreements can be exempt from the EU's competition rules. This exemption is governed by the Vertical Block Exemption Regulation 2022/720, which replaced the previous Vertical Restraints Block Exemption 2010.

The Vertical Block Exemption Regulation 2022/720 provides a safe harbour for agreements that meet certain conditions. The regulation includes a flowchart to help assess whether an agreement falls within the safe harbour.

Discover more: Vertical Agreement

The Vertical Restraints Block Exemption 2010 was archived on 10 May 2022, and was replaced by the VBER 2022 on 1 June 2022. This means that agreements that were previously exempt under the VBER 2010 were no longer exempt after 31 May 2022.

There was a 12-month transition period, ending on 31 May 2023, to accommodate pre-existing vertical agreements that were already in force on 31 May 2022. These agreements were exempt under the VBER 2010, but did not meet the conditions for exemption under the VBER 2022.

The Block Exemption Regulation has some special cases worth noting. The R&D BER focuses on protecting competition in innovation.

In some agreements, more than two parties are involved. The scope of the Specialization BER has been expanded to cover agreements concluded by more than two parties for all types of covered specialization and production agreements.

Certain types of specialization agreements are now included under the Specialization BER. The scope of the Specialization BER has been expanded to cover all types of covered specialization agreements.

The Specialization BER has been updated to cover more complex agreements. Agreements concluded by more than two parties are now included under the Specialization BER.

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The Vertical Block Exemption Regulation 2022/720 has a flowchart that sets out an overview process for assessing its safe harbour.

The flowchart is a helpful tool for navigating the regulation.

The flowchart is based on the assumption that a specific agreement is being assessed.

To view the flowchart, you can click on the link provided in the article section.

The flowchart is a useful resource for anyone looking to understand the VBER 2022's safe harbour.

A no-challenge clause in a trade mark licence may fall foul of competition law.

The European Commission and the European Court of Justice have generally regarded such clauses as anti-competitive.

Including a no-challenge clause in a non-exclusive trade mark licence may still be problematic.

It's worth noting that the European Commission and the European Court of Justice have taken a cautious approach to these types of clauses.

In some cases, a no-challenge clause may be considered contrary to Article 101(1) of the competition law.

The Modern Law of Copyright notes that even settlement agreements with no-challenge clauses can be problematic.

For another approach, see: Commission V Anic Partecipazioni SpA

The CMA recommends implementing the Recommended TTBEO over a 12-year period, with a one-year transitional period.

This means that businesses will have time to adjust to the new regulations, but it's essential to start planning now to ensure a smooth transition.

The CMA plans to publish guidance to help businesses understand the application of the block exemption order, which will be crucial for companies operating in the UK market.

The guidance will provide clarity on the updated definitions and treatment of technology-market thresholds, as well as the exclusion of technology pools and licensing negotiation groups from the Recommended TTBEO.

On a similar theme: Relevant Market

The European Commission has included guidance on sustainability agreements at a European level, providing a framework for companies to self-assess the compatibility of their joint sustainability initiatives with EU competition rules.

This new Chapter 9 of the Guidelines offers a safe harbor for sustainability standardization agreements that comply with certain conditions, allowing companies to cooperate on sustainability objectives without violating competition rules.

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Companies can now benefit from a specific safe harbor if their sustainability initiatives meet the outlined conditions, making it easier for them to work together on sustainability goals.

For more information on this development, check out our June 2023 blog post for further details on European Commission guidance for EU competition-compliant possibilities for cooperation between competitors in realizing sustainability objectives.