New rules on cooperation between competitors
06 May 2010
The Commission has published a new draft set of rules on agreements between competitors, so-called “horizontal agreements”. It had been working on the text since the days of the Kroes administration, but this is the first major piece of legislation proposed under Commissioner Almunia. His declared objective is soundly rooted in the Commission’s ever more economic approach to competition law enforcement: “facilitating competitor collaboration where it contributes to economic welfare without creating a risk for competition”.
The new text largely proposes some prudent modernisation in an area in which the Commission’s approach is generally sound and pragmatic. However, in a number of situations, the proposal would bring about fundamental change or clarify issues that have attracted controversy in recent years:
- Agreements with joint ventures: The most fundamental change affects how the concept of “undertaking” applies in a joint venture context. In a nutshell, the Commission now considers that a joint venture belongs to one and the same undertaking as each of its jointly controlling parents. As a consequence, competition rules would no longer apply to agreements between the joint venture and each of its parents. They would be considered as “intra group”. The flip side is exposure for parents where joint ventures infringe the competition rules. The Commission has already held parent companies liable for infringements committed by joint ventures on this basis.
- Information exchanges: There has been substantial uncertainty on the assessment of information exchanges between competitors and the European practice has not always been consistent in this area. The Commission has responded to requests for more clarity and includes a chapter on information exchanges in the new draft guidelines. It distinguishes between exchanges that have the object to restrict competition and those that have to be assessed on the basis of their effects. In particular, exchanges on future market conduct are very likely to fall into the first category and the ECJ has confirmed this view in its recent T-Mobile Netherlands decision. Whilst the Commission provides extensive guidance on how the effects of an information exchange should be assessed and balanced, it remains largely silent on the crucial distinction between exchanges that are restrictions by object and those where effects matter. The uncertainty around this distinction has been the root of some of the issues with information exchanges in practice and it is disappointing that the Commission has not provided more clarity here.
- Purchasing alliances: The draft is good news for purchasing alliances, in particular, if they concern joint buying by retailers that operate in different geographic areas. The Commission makes clear that such alliances are unlikely to infringe competition laws, even where the retailers’ market shares exceed the market share thresholds that define the safe harbour in this area.
- Standardisation: Finally, the new text includes guidance on standard setting, an issue that has been recently at the core of a number of controversial cases. It codifies the solutions that the Commission has developed in these cases. They insist on the transparency of standard setting processes as well as on access for all relevant players. Where standards are based on intellectual property rights, the Commission aims to ensure that these rights can be used by all players on fair, reasonable and non-discriminatory terms (“FRAND Commitment”).
The Commission invites stakeholders to provide comments on the draft by 25 June 2010. Linklaters will engage in a dialogue with the Commission in this process.
Please contact one of the partners listed below or your usual Linklaters contact should you require further information on the implications of the process for your company’s business, or wish to provide input for our dialogue with the Commission.
