On 4 May the Commission published for consultation draft regulations and guidelines for the assessment of co-operation agreements between competitors ("Horizontal Agreements"). The current regulations and guidelines expire on 31 December 2010. The published drafts update and clarify the application of competition rules to Horizontal Agreements.

The rules applicable to Horizontal Agreements are made up of two block exemption regulations (research and development ("R&D") agreements and specialisation agreements) and guidelines providing a framework for the assessment of the most common types of Horizontal Co-operation Agreements. After consultation with member states and national competition authorities, the Commission is of the view that the current regime in this area works well; however, the draft regulations and guidelines do contain some changes.

The draft R&D block exemption regulation has been reworked and restructured. One of the key changes is a disclosure obligation on the parties to the agreement. Prior to starting any R&D the parties must disclose all existing and pending intellectual property rights, so far as they are relevant to the exploitation of the results of the research by the parties. All parties must also be granted equal access to the results of the joint R&D for the purposes of further research or exploitation.

The draft specialisation block exemption is largely unchanged. A key change is the introduction of an additional market share threshold. Where intermediary products within a specialisation or joint production agreement are also used by one or more of the parties for the production of certain downstream products which they also sell, for the block exemption to apply, there is a market share threshold of 20% on this downstream market.

The draft guidelines have been substantially reworked. In particular, they include a new section on information exchange which can range from the direct sharing of data between competitors, through a trade association or by means of publishing. The guidelines provide details of how such information exchanges will be assessed. The Commission recognises that information exchange can increase efficiency, but such exchanges can also be restrictive and lead to competitors being aware of, inter alia, market strategies, intended future prices and quantities. When assessing the effects of an information exchange, and whether it will be exempt from the prohibition against anti-competitive agreements, the Commission will look at the characteristics of the information, for example, frequency, commercial sensitivity and age of the data. There will also be an examination of any efficiency gains and whether this will be passed onto consumers.

The draft guidelines also clarify the position with regards to agreements between joint ventures and their parents. Agreeing capacity and production volume of the joint venture or the agreed amount of outsourced products will not be an infringement of the competition rules. However, if the output of the joint venture is limited compared to what the parties to the joint venture could have produced on their own this will be restrictive on competition.  

The draft Guidelines also provide a number of examples of the Commission's thinking in the application of Article 101 to standardisation agreements.

The draft regulations and guidelines are open for consultation until 25 June 2010. The new regulations and guidelines will apply from 31 December 2010. It is proposed that there will be a one year transitional period until 31 December 2011 to ensure that Horizontal Agreements already in force satisfy the criteria of the new regulations.