18.12.2010 EN Official Journal of the European Union L 335/43 COMMISSION REGULATION (EU) No 1218/2010 of 14 December 2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to certain categories of specialisation agreements (Text with EEA relevance) THE EUROPEAN COMMISSION, Having regard to the Treaty on the Functioning of the European Union, Having regard to Regulation (EEC) No 2821/71 of the Council of 20 December 1971 on application of Article 85(3) of the Treaty to categories of agreements, decisions and concerted practices (1), Having published a draft of this Regulation, After consulting the Advisory Committee on Restrictive Practices and Dominant Positions, Whereas: (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 it. (2) Commission Regulation (EC) No 2658/2000 of 29 November 2000 on the application of Article 81(3) of the Treaty to categories of specialisation agreements (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 2010, and taking into account further experience acquired since its adoption, it is appropriate to adopt a new block exemption regulation. (3) This Regulation should meet the two requirements of ensuring effective protection of competition and 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. 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. (4) 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. (5) 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. (6) Agreements on specialisation in production are most likely to contribute to improving the production or distribution of goods if the parties have complementary skills, assets or activities, because they can concentrate on the manufacture of certain products and thus operate more efficiently and supply the products more cheaply. The same can generally be said about agreements on specialisation in the preparation of services. Given effective competition, it is likely that consumers will receive a fair share of the resulting benefits. (7) Such advantages can arise from agreements whereby one party fully or partly gives up the manufacture of certain products or preparation of certain services in favour of another party (unilateral specialisation), from agreements whereby each party fully or partly gives up the manufacture of certain products or preparation of certain services in favour of another party (reciprocal specialisation) and from agreements whereby the parties undertake to jointly manufacture certain products or prepare certain services (joint production). In the context of this Regulation, 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. The concept of joint production, however, does not require the parties to reduce their individual production activities outside the scope of their envisaged joint production arrangement. (8) The nature of unilateral and reciprocal specialisation agreements presupposes that the parties are active on the same product market. It is not necessary for the parties to be active on the same geographic market. Consequently, 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. Joint production agreements can be 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 agreement. Therefore, joint production agreements should fall within the scope of this Regulation irrespective of whether the parties are already active in the same product market. (9) 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 or joint distribution. Supply and purchase obligations may, but do not have to, be of an exclusive nature. (10) 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. However, where the products manufactured under a specialisation agreement are intermediary products which one or more of the parties fully or partly use as an input for their own production of certain 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. However, 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. (11) 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. (12) 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. (13) The Commission may withdraw the benefit of this Regulation, pursuant to Article 29(1) of Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty (3), where it finds in a particular case that an agreement to which the exemption provided for in this Regulation applies nevertheless has effects which are incompatible with Article 101(3) of the Treaty. (14) The competition authority of a Member State may withdraw the benefit of this Regulation pursuant to Article 29(2) of Regulation (EC) No 1/2003 in respect of the territory of that Member State, or a part thereof where, in a particular case, an agreement to which the exemption established by this Regulation applies nevertheless has effects which are incompatible with Article 101(3) of the Treaty in the territory of that Member State, or in a part thereof, and where such territory has all the characteristics of a distinct geographic market. (15) The benefit of this Regulation could be withdrawn pursuant to Article 29 of Regulation (EC) No 1/2003 where, for example, the relevant market is very concentrated and competition is already weak, in particular because of the individual market positions of other market participants or links between other market participants created by parallel specialisation agreements. (16) 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, HAS ADOPTED THIS REGULATION: Article 1 Definitions 1. For the purposes of this Regulation, the following definitions shall apply: (a) ‘specialisation agreement’ means a unilateral specialisation agreement, a reciprocal specialisation agreement or a joint production agreement; (b) ‘unilateral specialisation agreement’ means an agreement between two parties which are active on the same product market by virtue of which one party agrees to fully or partly cease production of certain products or to refrain from producing those products and to purchase them from the other party, who agrees to produce and supply those products; (c) ‘reciprocal specialisation agreement’ means an agreement between two or more parties which are active on the same product market, by virtue of which two or more parties on a reciprocal basis agree to fully or partly cease or refrain from producing certain but different products and to purchase these products from the other parties, who agree to produce and supply them; (d) ‘joint production agreement’ means an agreement by virtue of which two or more parties agree to produce certain products jointly; (e) ‘agreement’ means an agreement, a decision by an association of undertakings or a concerted practice; (f) ‘product’ means a good or a service, including both intermediary goods or services and final goods or services, with the exception of distribution and rental services; (g) ‘production’ means the manufacture of goods or the preparation of services and includes production by way of subcontracting; (h) ‘preparation of services’ means activities upstream of the provision of services to customers; (i) ‘relevant market’ means the relevant product and geographic market to which the specialisation products belong, and, in addition, where the specialisation products are intermediary products which one or more of the parties fully or partly use captively for the production of downstream products, the relevant product and geographic market to which the downstream products belong; (j) ‘specialisation product’ means a product which is produced under a specialisation agreement; (k) ‘downstream product’ means a product for which a specialisation product is used by one or more of the parties as an input and which is sold by those parties on the market; (l) ‘competing undertaking’ means an actual or potential competitor; (m) ‘actual competitor’ means an undertaking that is active on the same relevant market; (n) ‘potential competitor’ means an undertaking that, in the absence of the specialisation agreement, would, on realistic grounds and not just as a mere theoretical possibility, in case of a small but permanent increase in relative prices be likely to undertake, within not more than 3 years, the necessary additional investments or other necessary switching costs to enter the relevant market; (o) ‘exclusive supply obligation’ means an obligation not to supply a competing undertaking other than a party to the agreement with the specialisation product; (p) ‘exclusive purchase obligation’ means an obligation to purchase the specialisation product only from a party to the agreement; (q) ‘joint’, in the context of distribution, means that the parties: (i) carry out the distribution of the products by way of a joint team, organisation or undertaking; or (ii) appoint a third party distributor on an exclusive or non-exclusive basis, provided that the third party is not a competing undertaking; (r) ‘distribution’ means distribution, including the sale of goods and the provision of services. 2. For the purposes of this Regulation, the terms ‘undertaking’ and ‘party’ shall include their respective connected undertakings. ‘Connected undertakings’ means: (a) undertakings in which a party to the specialisation agreement, directly or indirectly: (i) has the power to exercise more than half the voting rights; (ii) has the power to appoint more than half the members of the supervisory board, board of management or bodies legally representing the undertaking; or (iii) has the right to manage the undertaking’s affairs; (b) undertakings which directly or indirectly have, over a party to the specialisation agreement, the rights or powers listed in point (a); (c) undertakings in which an undertaking referred to in point (b) has, directly or indirectly, the rights or powers listed in point (a); (d) undertakings in which a party to the specialisation agreement together with one or more of the undertakings referred to in points (a), (b) or (c), or in which two or more of the latter undertakings, jointly have the rights or powers listed in point (a); (e) undertakings in which the rights or the powers listed in point (a) are jointly held by: (i) parties to the specialisation agreement or their respective connected undertakings referred to in points (a) to (d); or (ii) one or more of the parties to the specialisation agreement or one or more of their connected undertakings referred to in points (a) to (d) and one or more third parties. Article 2 Exemption 1. Pursuant to Article 101(3) of the Treaty and subject to the provisions of this Regulation, it is hereby declared that Article 101(1) of the Treaty shall not apply to specialisation agreements. This exemption shall apply to the extent that such agreements contain restrictions of competition falling within the scope of Article 101(1) of the Treaty. 2. The exemption provided for in paragraph 1 shall apply to specialisation agreements containing provisions which relate to the assignment or licensing of intellectual property rights to one or more of the parties, provided that those provisions do not constitute the primary object of such agreements, but are directly related to and necessary for their implementation. 3. The exemption provided for in paragraph 1 shall apply to specialisation agreements whereby: (a) the parties accept an exclusive purchase or exclusive supply obligation; or (b) the parties do not independently sell the specialisation products but jointly distribute those products. Article 3 Market share threshold The exemption provided for in Article 2 shall apply on condition that the combined market share of the parties does not exceed 20 % on any relevant market. Article 4 Hardcore restrictions The exemption provided for in Article 2 shall not apply to specialisation agreements which, directly or indirectly, in isolation or in combination with other factors under the control of the parties, have as their object any of the following: (a) the fixing of prices when selling the products to third parties with the exception of the fixing of prices charged to immediate customers in the context of joint distribution; (b) the limitation of output or sales with the exception of: (i) provisions on the agreed amount of products in the context of unilateral or reciprocal specialisation agreements or the setting of the capacity and production volume in the context of a joint production agreement; and (ii) the setting of sales targets in the context of joint distribution; (c) the allocation of markets or customers. Article 5 Application of the market share threshold For the purposes of applying the market share threshold provided for in Article 3 the following rules shall apply: (a) the market share shall be calculated on the basis of the market sales value; if market sales value data are not available, estimates based on other reliable market information, including market sales volumes, may be used to establish the market share of the parties; (b) the market share shall be calculated on the basis of data relating to the preceding calendar year; (c) the market share held by the undertakings referred to in point (e) of the second subparagraph of Article 1(2) shall be apportioned equally to each undertaking having the rights or the powers listed in point (a) of that subparagraph; (d) if the market share referred to in Article 3 is initially not more than 20 % but subsequently rises above that level without exceeding 25 %, the exemption provided for in Article 2 shall continue to apply for a period of 2 consecutive calendar years following the year in which the 20 % threshold was first exceeded; (e) if the market share referred to in Article 3 is initially not more than 20 % but subsequently rises above 25 %, the exemption provided for in Article 2 shall continue to apply for a period of 1 calendar year following the year in which the level of 25 % was first exceeded; (f) the benefit of points (d) and (e) may not be combined so as to exceed a period of 2 calendar years. Article 6 Transitional period The prohibition laid down in Article 101(1) of the Treaty shall not apply during the period from 1 January 2011 to 31 December 2012 in respect of agreements already in force on 31 December 2010 which do not satisfy the conditions for exemption provided for in this Regulation but which satisfy the conditions for exemption provided for in Regulation (EC) No 2658/2000. Article 7 Period of validity This Regulation shall enter into force on 1 January 2011. It shall expire on 31 December 2022. This Regulation shall be binding in its entirety and directly applicable in all Member States. Done at Brussels, 14 December 2010. For the Commission The President José Manuel BARROSO (1) OJ L 285, 29.12.1971, p. 46. (*1) With effect from 1 December 2009, Article 81 of the EC Treaty has become Article 101 of the Treaty on the Functioning of the European Union (TFEU). The two Articles are, in substance, identical. For the purposes of this Regulation, references to Article 101 of the TFEU should be understood as references to Article 81 of the EC Treaty where appropriate. The TFEU also introduced certain changes in terminology, such as the replacement of ‘Community’ by ‘Union’ and ‘common market’ by ‘internal market’. The terminology of the TFEU will be used throughout this Regulation. (2) OJ L 304, 5.12.2000, p. 3. (3) OJ L 1, 4.1.2003, p. 1.

Summary: Exemption for specialisation agreements Exemption for specialisation agreements This regulation provides a block exemption for specialisation agreements and, in doing so, aims to ensure effective protection of competition and provide adequate legal security for the parties to specialisation agreements. ACT Commission Regulation (EU) No 1218/2010 of 14 December 2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to certain categories of specialisation agreements. SUMMARY Article 101(1) of the Treaty on the Functioning of the European Union (TFEU) is not applicable to specialisation agreements * (including joint production agreements), provided the agreement does not contain any hardcore restrictions of competition and the parties' combined market share does not exceed 20 %. The exemption provided for in Regulation (EEC) No 2821/71 also extends to specialisation agreements containing provisions relating to the assignment or licensing of intellectual property rights so long as those provisions are not the primary object of such agreements, but are instead directly related to and necessary for their implementation. Moreover, this regulation also provides an exemption where the parties accept exclusive purchase or supply obligations or jointly distribute the products they manufacture under a specialisation or joint production agreement. Market share is calculated on the basis of the market sales value or, if that data is not available, then estimates based on other reliable market information may be used to establish the market share of the parties. If, after a certain time, the market share exceeds the 20 % threshold but remains below 25 %, the exemption continues to apply for two years. However, if the market share rises over 25 %, the exemption only applies for the following one year. Hardcore restrictions The exemption does not apply to specialisation agreements aimed, directly or indirectly, at: the fixing of prices; the limitation of output or sales; the allocation of markets or customers. Key terms used in the act Specialisation agreement: References Act Entry into force – Date of expiry Deadline for transposition in the Member States Official Journal Regulation (EU) No 1218/2010 1.1.2011 – 31.12.2022 - OJ L 335, 18.12.2010 Last updated: 25.05.2011


18.12.2010 EN Official Journal of the European Union L 335/36 COMMISSION REGULATION (EU) No 1217/2010 of 14 December 2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to certain categories of research and development agreements (Text with EEA relevance) THE EUROPEAN COMMISSION, Having regard to the Treaty on the Functioning of the European Union, Having regard to Regulation (EEC) No 2821/71 of the Council of 20 December 1971 on application of Article 85(3) of the Treaty to categories of agreements, decisions and concerted practices (1), Having published a draft of this Regulation, After consulting the Advisory Committee on Restrictive Practices and Dominant Positions, Whereas: (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 the research and development of products, technologies or processes up to the stage of industrial application, and 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. This Regulation is intended to facilitate research and development while at the same time effectively protecting competition. (3) Commission Regulation (EC) No 2659/2000 of 29 November 2000 on the application of Article 81(3) of the Treaty to categories of research and development agreements (2) defines categories of research and development 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 2010, and taking into account further experience acquired since its adoption, it is appropriate to adopt a new block exemption regulation. (4) This Regulation should meet the two requirements of ensuring effective protection of competition and 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. 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. (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) 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. (7) 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. (8) Cooperation in 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. This also includes scenarios where one party merely finances the research and development activities of another party. (9) The joint exploitation of results can be considered as the natural consequence of joint research and development. It can take different forms such as manufacture, the exploitation of intellectual property rights that substantially contribute to technical or economic progress, or the marketing of new products. (10) Consumers can generally be expected to benefit from the increased volume and effectiveness of research and development through the introduction of new or improved products or services, a quicker launch of those products or services, or the reduction of prices brought about by new or improved technologies or processes. (11) In order to justify the exemption, the joint exploitation should relate to products, technologies or processes for which the use of the results of the research and development is decisive. 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 further research and development and 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. Moreover, where academic bodies, research institutes or undertakings which 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. 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. (12) Similarly, 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 rates of any licence fee charged should not be so high as to effectively impede access to the know-how by the other parties. (13) The exemption established by this Regulation should be limited to research and development agreements which do not afford the undertakings the possibility of eliminating competition in respect of a substantial part of the products, services or technologies in question. It is necessary to exclude from the block exemption agreements between competitors whose combined share of the market for products, services or technologies capable of being improved or replaced by the results of the research and development exceeds a certain level at the time the agreement is entered into. 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 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 research and development agreement needs to be conducted under Article 101 of the Treaty. (14) In order to ensure the maintenance of effective competition during 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, services or technologies arising out of the joint research and development becomes too great. 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. (15) 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. (16) 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. (17) 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 %. (18) Agreements between undertakings which are not competing manufacturers of products, technologies or processes capable of being improved, substituted or replaced by the results of the research and development will only eliminate effective competition in research and development in exceptional circumstances. It is therefore appropriate to enable such agreements to benefit from the exemption established by this Regulation irrespective of market share and to address any exceptional cases by way of withdrawal of its benefit. (19) The Commission may withdraw the benefit of this Regulation, pursuant to Article 29(1) of Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty (3), where it finds in a particular case that an agreement to which the exemption provided for in this Regulation applies nevertheless has effects which are incompatible with Article 101(3) of the Treaty. (20) The competition authority of a Member State may withdraw the benefit of this Regulation pursuant to Article 29(2) of Regulation (EC) No 1/2003 in respect of the territory of that Member State, or a part thereof where, in a particular case, an agreement to which the exemption established by this Regulation applies nevertheless has effects which are incompatible with Article 101(3) of the Treaty in the territory of that Member State, or in a part thereof, and where such territory has all the characteristics of a distinct geographic market. (21) The benefit of this Regulation could be withdrawn pursuant to Article 29 of Regulation (EC) No 1/2003, for example, where the existence of a research and development agreement substantially restricts the scope for third parties to carry out research and development in the relevant field because of the limited research capacity available elsewhere, where because of the particular structure of supply, the existence of the research and development agreement substantially restricts the access of third parties to the market for the contract products or contract technologies, where without any objectively valid reason, the parties do not exploit the results of the joint research and development vis-à-vis third parties, where the contract products or contract technologies are not subject in the whole or a substantial part of the internal market to effective competition from products, technologies or processes considered by users as equivalent in view of their characteristics, price and intended use, or where the existence of the research and development agreement would restrict competition in innovation or eliminate effective competition in research and development on a particular market. (22) 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, HAS ADOPTED THIS REGULATION: Article 1 Definitions 1. For the purposes of this Regulation, the following definitions shall apply: (a) ‘research and development agreement’ means an agreement entered into between two or more parties which relate to the conditions under which those parties pursue: (i) joint research and development of contract products or contract technologies and joint exploitation of the results of that research and development; (ii) joint exploitation of the results of research and development of contract products or contract technologies jointly carried out pursuant to a prior agreement between the same parties; (iii) joint research and development of contract products or contract technologies excluding joint exploitation of the results; (iv) paid-for research and development of contract products or contract technologies and joint exploitation of the results of that research and development; (v) joint exploitation of the results of paid-for research and development of contract products or contract technologies pursuant to a prior agreement between the same parties; or (vi) paid-for research and development of contract products or contract technologies excluding joint exploitation of the results; (b) ‘agreement’ means an agreement, a decision by an association of undertakings or a concerted practice; (c) ‘research and development’ means the acquisition of know-how relating to products, technologies or processes and the carrying out of theoretical analysis, systematic study or experimentation, including experimental production, technical testing of products or processes, the establishment of the necessary facilities and the obtaining of intellectual property rights for the results; (d) ‘product’ means a good or a service, including both intermediary goods or services and final goods or services; (e) ‘contract technology’ means a technology or process arising out of the joint research and development; (f) ‘contract product’ means a product arising out of the joint research and development or manufactured or provided applying the contract technologies; (g) ‘exploitation of the results’ means the production or distribution of the contract products or the application of the contract technologies or the assignment or licensing of intellectual property rights or the communication of know-how required for such manufacture or application; (h) ‘intellectual property rights’ means intellectual property rights, including industrial property rights, copyright and neighbouring rights; (i) ‘know-how’ means a package of non-patented practical information, resulting from experience and testing, which is secret, substantial and identified; (j) ‘secret’, in the context of know-how, means that the know-how is not generally known or easily accessible; (k) ‘substantial’, in the context of know-how, means that the know-how is significant and useful for the manufacture of the contract products or the application of the contract technologies; (l) ‘identified’, in the context of know-how, means that the know-how is described in a sufficiently comprehensive manner so as to make it possible to verify that it fulfils the criteria of secrecy and substantiality; (m) ‘joint’, in the context of activities carried out under a research and development agreement, means activities where the work involved is: (i) carried out by a joint team, organisation or undertaking; (ii) jointly entrusted to a third party; or (iii) allocated between the parties by way of specialisation in the context of research and development or exploitation; (n) ‘specialisation in the context of research and development’ means that each of the parties is involved in the research and development activities covered by the research and development agreement and they divide the research and development work between them in any way that they consider most appropriate; this does not include paid-for research and development; (o) ‘specialisation in the context of exploitation’ means that the parties allocate between them individual tasks such as production or distribution, or impose restrictions upon each other regarding the exploitation of the results such as restrictions in relation to certain territories, customers or fields of use; this includes a scenario where only one party produces and distributes the contract products on the basis of an exclusive licence granted by the other parties; (p) ‘paid-for research and development’ means research and development that is carried out by one party and financed by a financing party; (q) ‘financing party’ means a party financing paid-for research and development while not carrying out any of the research and development activities itself; (r) ‘competing undertaking’ means an actual or potential competitor; (s) ‘actual competitor’ means an undertaking that is supplying a product, technology or process capable of being improved, substituted or replaced by the contract product or the contract technology on the relevant geographic market; (t) ‘potential competitor’ means an undertaking that, in the absence of the research and development agreement, would, on realistic grounds and not just as a mere theoretical possibility, in case of a small but permanent increase in relative prices be likely to undertake, within not more than 3 years, the necessary additional investments or other necessary switching costs to supply a product, technology or process capable of being improved, substituted or replaced by the contract product or contract technology on the relevant geographic market; (u) ‘relevant product market’ means the relevant market for the products capable of being improved, substituted or replaced by the contract products; (v) ‘relevant technology market’ means the relevant market for the technologies or processes capable of being improved, substituted or replaced by the contract technologies. 2. For the purposes of this Regulation, the terms ‘undertaking’ and ‘party’ shall include their respective connected undertakings. ‘Connected undertakings’ means: (a) undertakings in which a party to the research and development agreement, directly or indirectly: (i) has the power to exercise more than half the voting rights; (ii) has the power to appoint more than half the members of the supervisory board, board of management or bodies legally representing the undertaking; or (iii) has the right to manage the undertaking’s affairs; (b) undertakings which directly or indirectly have, over a party to the research and development agreement, the rights or powers listed in point (a); (c) undertakings in which an undertaking referred to in point (b) has, directly or indirectly, the rights or powers listed in point (a); (d) undertakings in which a party to the research and development agreement together with one or more of the undertakings referred to in points (a), (b) or (c), or in which two or more of the latter undertakings, jointly have the rights or powers listed in point (a); (e) undertakings in which the rights or the powers listed in point (a) are jointly held by: (i) parties to the research and development agreement or their respective connected undertakings referred to in points (a) to (d); or (ii) one or more of the parties to the research and development agreement or one or more of their connected undertakings referred to in points (a) to (d) and one or more third parties. Article 2 Exemption 1. Pursuant to Article 101(3) of the Treaty and subject to the provisions of this Regulation, it is hereby declared that Article 101(1) of the Treaty shall not apply to research and development agreements. This exemption shall apply to the extent that such agreements contain restrictions of competition falling within the scope of Article 101(1) of the Treaty. 2. The exemption provided for in paragraph 1 shall apply to research and development agreements containing provisions which relate to the assignment or licensing of intellectual property rights to one or more of the parties or to an entity the parties establish to carry out the joint research and development, paid-for research and development or joint exploitation, provided that those provisions do not constitute the primary object of such agreements, but are directly related to and necessary for their implementation. Article 3 Conditions for exemption 1. The exemption provided for in Article 2 shall apply subject to the conditions set out in paragraphs 2 to 5. 2. The research and development agreement must stipulate that all the parties have full access to the final results of the joint research and development or paid-for research and development, including any resulting intellectual property rights and know-how, for the purposes of further research and development and exploitation, as soon as they become available. Where the parties limit their rights of exploitation in accordance with this Regulation, in particular where they specialise in the context of exploitation, access to the results for the purposes of exploitation may be limited accordingly. Moreover, research institutes, academic bodies, or undertakings which supply research and development as a commercial service without normally being active in the exploitation of results may agree to confine their use of the results for the purposes of further research. The research and development agreement may foresee that the parties compensate each other for giving access to the results for the purposes of further research or exploitation, but the compensation must not be so high as to effectively impede such access. 3. Without prejudice to paragraph 2, where the research and development agreement provides only for joint research and development or paid-for research and development, the research and development agreement must stipulate that each party must be granted access to any pre-existing know-how of the other parties, if this know-how is indispensable for the purposes of its exploitation of the results. The research and development agreement may foresee that the parties compensate each other for giving access to their pre-existing know-how, but the compensation must not be so high as to effectively impede such access. 4. Any joint exploitation may only pertain to results which are protected by intellectual property rights or constitute know-how and which are indispensable for the manufacture of the contract products or the application of the contract technologies. 5. Parties charged with the manufacture of the contract products by way of specialisation in the context of exploitation must be required to fulfil orders for supplies of the contract products from the other parties, except where the research and development agreement also provides for joint distribution within the meaning of point (m)(i) or (ii) of Article 1(1) or where the parties have agreed that only the party manufacturing the contract products may distribute them. Article 4 Market share threshold and duration of exemption 1. Where the parties are not competing undertakings, the exemption provided for in Article 2 shall apply for the duration of the research and development. Where the results are jointly exploited, the exemption shall continue to apply for 7 years from the time the contract products or contract technologies are first put on the market within the internal market. 2. Where two or more of the parties are competing undertakings, the exemption provided for in Article 2 shall apply for the period referred to in paragraph 1 of this Article only if, at the time the research and development agreement is entered into: (a) in the case of research and development agreements referred to in point (a)(i), (ii) or (iii) of Article 1(1), the combined market share of the parties to a research and development agreement does not exceed 25 % on the relevant product and technology markets; or (b) in the case of research and agreements referred to in point (a)(iv), (v) or (vi) of Article 1(1), the combined market share of the financing party and all the parties with which the financing party has entered into research and development agreements with regard to the same contract products or contract technologies, does not exceed 25 % on the relevant product and technology markets. 3. After the end of the period referred to in paragraph 1, the exemption shall continue to apply as long as the combined market share of the parties does not exceed 25 % on the relevant product and technology markets. Article 5 Hardcore restrictions The exemption provided for in Article 2 shall not apply to research and development agreements which, directly or indirectly, in isolation or in combination with other factors under the control of the parties, have as their object any of the following: (a) the restriction of the freedom of the parties to carry out research and development independently or in cooperation with third parties in a field unconnected with that to which the research and development agreement relates or, after the completion of the joint research and development or the paid-for research and development, in the field to which it relates or in a connected field; (b) the limitation of output or sales, with the exception of: (i) the setting of production targets where the joint exploitation of the results includes the joint production of the contract products; (ii) the setting of sales targets where the joint exploitation of the results includes the joint distribution of the contract products or the joint licensing of the contract technologies within the meaning of point (m)(i) or (ii) of Article 1(1); (iii) practices constituting specialisation in the context of exploitation; and (iv) the restriction of the freedom of the parties to manufacture, sell, assign or license products, technologies or processes which compete with the contract products or contract technologies during the period for which the parties have agreed to jointly exploit the results; (c) the fixing of prices when selling the contract product or licensing the contract technologies to third parties, with the exception of the fixing of prices charged to immediate customers or the fixing of licence fees charged to immediate licensees where the joint exploitation of the results includes the joint distribution of the contract products or the joint licensing of the contract technologies within the meaning of point (m)(i) or (ii) of Article 1(1); (d) the restriction of the territory in which, or of the customers to whom, the parties may passively sell the contract products or license the contract technologies, with the exception of the requirement to exclusively license the results to another party; (e) the requirement not to make any, or to limit, active sales of the contract products or contract technologies in territories or to customers which have not been exclusively allocated to one of the parties by way of specialisation in the context of exploitation; (f) the requirement to refuse to meet demand from customers in the parties’ respective territories, or from customers otherwise allocated between the parties by way of specialisation in the context of exploitation, who would market the contract products in other territories within the internal market; (g) the requirement to make it difficult for users or resellers to obtain the contract products from other resellers within the internal market. Article 6 Excluded restrictions The exemption provided for in Article 2 shall not apply to the following obligations contained in research and development agreements: (a) the obligation not to challenge after completion of the research and development the validity of intellectual property rights which the parties hold in the internal market and which are relevant to the research and development or, after the expiry of the research and development agreement, the validity of intellectual property rights which the parties hold in the internal market and which protect the results of the research and development, without prejudice to the possibility to provide for termination of the research and development agreement in the event of one of the parties challenging the validity of such intellectual property rights; (b) the obligation not to grant licences to third parties to manufacture the contract products or to apply the contract technologies unless the agreement provides for the exploitation of the results of the joint research and development or paid-for research and development by at least one of the parties and such exploitation takes place in the internal market vis-à-vis third parties. Article 7 Application of the market share threshold For the purposes of applying the market share threshold provided for in Article 4 the following rules shall apply: (a) the market share shall be calculated on the basis of the market sales value; if market sales value data are not available, estimates based on other reliable market information, including market sales volumes, may be used to establish the market share of the parties; (b) the market share shall be calculated on the basis of data relating to the preceding calendar year; (c) the market share held by the undertakings referred to in point (e) of the second subparagraph of Article 1(2) shall be apportioned equally to each undertaking having the rights or the powers listed in point (a) of that subparagraph; (d) if the market share referred to in Article 4(3) is initially not more than 25 % but subsequently rises above that level without exceeding 30 %, the exemption provided for in Article 2 shall continue to apply for a period of two consecutive calendar years following the year in which the 25 % threshold was first exceeded; (e) if the market share referred to in Article 4(3) is initially not more than 25 % but subsequently rises above 30 %, the exemption provided for in Article 2 shall continue to apply for a period of one calendar year following the year in which the level of 30 % was first exceeded; (f) the benefit of points (d) and (e) may not be combined so as to exceed a period of two calendar years. Article 8 Transitional period The prohibition laid down in Article 101(1) of the Treaty shall not apply during the period from 1 January 2011 to 31 December 2012 in respect of agreements already in force on 31 December 2010 which do not satisfy the conditions for exemption provided for in this Regulation but which satisfy the conditions for exemption provided for in Regulation (EC) No 2659/2000. Article 9 Period of validity This Regulation shall enter into force on 1 January 2011. It shall expire on 31 December 2022. This Regulation shall be binding in its entirety and directly applicable in all Member States. Done at Brussels, 14 December 2010. For the Commission The President José Manuel BARROSO (1) OJ L 285, 29.12.1971, p. 46. (*1) With effect from 1 December 2009, Article 81 of the EC Treaty has become Article 101 of the Treaty on the Functioning of the European Union (TFEU). The two articles are, in substance, identical. For the purposes of this Regulation, references to Article 101 of the TFEU should be understood as references to Article 81 of the EC Treaty where appropriate. The TFEU also introduced certain changes in terminology, such as the replacement of ‘Community’ by ‘Union’ and ‘common market’ by ‘internal market’. The terminology of the TFEU will be used throughout this Regulation. (2) OJ L 304, 5.12.2000, p. 7. (3) OJ L 1, 4.1.2003, p. 1.

Summary: Exemption for research and development agreements Exemption for research and development agreements SUMMARY OF: Regulation (EU) No 1217/2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union (TFEU) to certain categories of research and development agreements WHAT IS THE AIM OF THE REGULATION? Article 101 TFEU sets out the rules concerning concerted practices and agreements between companies. As a general rule, such concerted practices and agreements are banned unless they fall within the scope of Article 101(3) when they are exceptions to the rule. Regulation (EU) No 1217/2010 states that Article 101 does not apply to research and development (R&D) agreements* when the parties either pursue joint R&D of products or processes and joint exploitation of the results of that R&D, or pursue either of those activities in isolation. KEY POINTS Article 101(1) TFEU is not applicable to R&D agreements. Regulation (EEC) No 2821/71, however, provides an exemption for R&D agreements which contain rules relating to the assignment or licensing of intellectual property rights in order to carry out the joint R&D, paid-for R&D or joint exploitation, so long as those provisions are not the primary object of such agreements, but are instead directly related to and necessary for their implementation. The regulation also block exempts the joint exploitation of the results of R&D carried out by the parties under the regulation. This regulation replaces Regulation (EC) No 2659/2000, which expired on 31 December 2010. Conditions for exemption To be exempted, the agreement must state that all the parties have full access to the final results of the R&D, including any resulting intellectual property rights and know-how, for the purposes of further R&D and exploitation. If the parties limit their rights of exploitation, access to the results for the purposes of exploitation may be limited accordingly. Where the agreement only provides for joint R&D or paid-for R&D, each party must have access to any pre-existing know-how of the other parties concerned, if this know-how is indispensable for the exploitation of the results. This exchange of pre-existing know-how may be compensated, but the compensation must not be so high as to effectively prevent such access. Any joint exploitation may only concern results which are protected by intellectual property rights or constitute know-how, and which are indispensable for the manufacture of the contract products or the application of the contract technologies. Market share threshold and duration of exemption Where the parties to the R&D agreement are not competing undertakings, the exemption provided for by this regulation is applicable for the duration of the R&D. Where the results are jointly exploited, the exemption continues to apply for 7 years after the contract products or contract technologies are first put on the European Union (EU) market. Where the parties are competing undertakings, at the time the R&D agreement is entered into, the exemption is applicable only if: in the case of joint R&D agreements, the combined market share of the parties does not exceed 25% on the relevant product and technology markets;in the case of paid-for R&D agreements, the combined market share of the financing party and all the parties with which the financing party has entered into R&D agreements, relating to the same contract products or contract technologies, does not exceed 25% on the relevant product and technology markets. At the end of the 7-year period, the exemption shall continue to apply as long as the combined market share of the parties does not exceed 25% on the relevant markets. Hardcore restrictions The exemption does not apply to R&D agreements which, directly or indirectly, in isolation or in combination with other factors under the control of the parties, have as their object: the restriction of the freedom of the parties to carry out R&D in an unrelated field;the restriction of the freedom of the parties to pursue R&D in a related field after the completion of the R&D agreement concerned;the limitation of output or sales, with certain exceptions. Excluded restrictions The exemption does not apply to the following obligations contained in R&D agreements: the obligation not to challenge the validity of related intellectual property rights after completion of the R&D;the obligation not to grant licences to third parties to manufacture the contract products or to apply to contract technologies, unless the agreement provides for the exploitation of the results by at least one of the parties and such exploitation takes place in the internal market vis-à-vis third parties. European Commission guidelines In 2011, the Commission adopted guidelines on the interpretation and applicability of Article 101 TFEU to horizontal cooperation agreements*, which include R&D agreements. FROM WHEN DOES THE REGULATION APPLY? It has applied since 1 January 2011 and expires on 31 December 2022. BACKGROUND In 2019, the Commission embarked on an evaluation to examine whether to let the EU regulations dealing with horizontal agreements lapse when they expire in December 2022, or whether to extend or amend them (and the guidelines on how to interpret them). The results of its evaluation were published in July 2021 (see press release). The evaluation concluded that certain issues would need to be addressed in order to improve legal certainty. The Commission will launch the impact assessment phase of the review to look into the issues identified during the evaluation with a view to having revised rules in place by 31 December 2022, when the current rules expire. KEY TERMS Research and development agreement. An agreement entered into between two or more parties, relating to the conditions under which the parties pursue:joint R&D of contract products or contract technologies and joint exploitation of the results of that R&D;joint exploitation of the results of R&D of contract products or contract technologies jointly carried out pursuant to a prior agreement between the same parties;joint R&D of contract products or contract technologies excluding joint exploitation of the results;paid-for R&D of contract products or contract technologies and joint exploitation of the results of that R&D;joint exploitation of the results of paid-for R&D of contract products or contract technologies pursuant to a prior agreement between the same parties;paid-for R&D of contract products or contract technologies excluding joint exploitation of the results. Horizontal agreements. Agreements entered into between two or more undertakings operating at the same level in the market. Horizontal cooperation relates, in most cases, to cooperation between actual or potential competitors in areas such as R&D, production, purchasing, commercialisation or standardisation. It can also involve information exchange, either as a self-standing agreement or in the context of another type of horizontal cooperation agreement. MAIN DOCUMENT Commission Regulation (EU) No 1217/2010 of 14 December 2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to certain categories of research and development agreements (OJ L 335, 18.12.2010, pp. 36–42). RELATED DOCUMENTS Consolidated version of the Treaty on the Functioning of the European Union — Part Three — Union policies and internal actions — Title VII — Common rules on competition, taxation and approximation of laws — Chapter 1 — Rules on competition — Section 1 — Rules applying to undertakings — Article 101 (ex Article 81 TEC) (OJ C 202, 7.6.2016, pp. 88–89). Communication from the Commission — Guidelines on the applicability of Article 101 of the Treaty on the Functioning of the European Union to horizontal co-operation agreements (OJ C 11, 14.1.2011, pp. 1–72). Regulation (EEC) No 2821/71 of the Council of 20 December 1971 on application of Article 85(3) of the Treaty to categories of agreements, decisions and concerted practices (OJ L 285, 29.12.1971, pp. 46–48). Successive amendments to Regulation (EEC) No 2821/71 have been incorporated in the original text. This consolidated version is of documentary value only. last update 29.10.2021


28.5.2010 EN Official Journal of the European Union L 129/52 COMMISSION REGULATION (EU) No 461/2010 of 27 May 2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to categories of vertical agreements and concerted practices in the motor vehicle sector (Text with EEA relevance) THE EUROPEAN COMMISSION, Having regard to the Treaty on the Functioning of the European Union, Having regard to Regulation No 19/65/EEC of the Council of 2 March 1965 on the application of Article 85(3) of the Treaty to certain categories of agreements and concerted practices (1), and in particular Article 1 thereof, Having published a draft of this Regulation, After consulting the Advisory Committee on Restrictive Practices and Dominant Positions, Whereas: (1) Regulation No 19/65/EEC empowers the Commission to apply Article 101(3) of the Treaty on the Functioning of the European Union (2) by regulation to certain categories of vertical agreements and corresponding concerted practices falling within Article 101(1) of the Treaty. Block exemption regulations apply to vertical agreements which fulfil certain conditions and may be general or sector-specific. (2) The Commission has defined a category of vertical agreements which it regards as normally satisfying the conditions laid down in Article 101(3) of the Treaty and to this end has adopted Commission Regulation (EU) No 330/2010 of 20 April 2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to categories of vertical agreements and concerted practices (3), which replaces Commission Regulation (EC) No 2790/1999 (4). (3) The motor vehicle sector, which includes both passenger cars and commercial vehicles, has been subject to specific block exemption regulations since 1985, the most recent being Commission Regulation (EC) No 1400/2002 of 31 July 2002 on the application of Article 81(3) of the Treaty to categories of vertical agreements and concerted practices in the motor vehicle sector (5). Regulation (EC) No 2790/1999 expressly stated that it did not apply to vertical agreements the subject matter of which fell within the scope of any other block exemption regulation. The motor vehicle sector therefore fell outside the scope of that Regulation. (4) Regulation (EC) No 1400/2002 expires on 31 May 2010. However, the motor vehicle sector should continue to benefit from a block exemption in order to simplify administration and reduce compliance costs for the undertakings concerned, while ensuring effective supervision of markets in accordance with Article 103(2)(b) of the Treaty. (5) Experience acquired since 2002 regarding the distribution of new motor vehicles, the distribution of spare parts and the provision of repair and maintenance services for motor vehicles, makes it possible to define a category of vertical agreements in the motor vehicle sector which can be regarded as normally satisfying the conditions laid down in Article 101(3) of the Treaty. (6) This category includes vertical agreements for the purchase, sale or resale of new motor vehicles, vertical agreements for the purchase, sale or resale of spare parts for motor vehicles and vertical agreements for the provision of repair and maintenance services for such vehicles, where those agreements are concluded between non-competing undertakings, between certain competitors, or by certain associations of retailers or repairers. It also includes vertical agreements containing ancillary provisions on the assignment or use of intellectual property rights. The term ‘vertical agreements’ should be defined accordingly to include both such agreements and the corresponding concerted practices. (7) Certain types of vertical agreements can improve economic efficiency within a chain of production or distribution by facilitating better coordination between the participating undertakings. In particular, they can lead to a reduction in the transaction and distribution costs of the parties and to an optimisation of their sales and investment levels. (8) The likelihood that such efficiency-enhancing effects will outweigh any anticompetitive effects due to restrictions contained in vertical agreements depends on the degree of market power of the parties to the agreement and, therefore, on the extent to which those undertakings face competition from other suppliers of goods or services regarded by their customers as interchangeable or substitutable for one another, by reason of the products’ characteristics, their prices and their intended use. Vertical agreements containing restrictions which are likely to restrict competition and harm consumers, or which are not indispensable to the attainment of the efficiency-enhancing effects, should be excluded from the benefit of the block exemption. (9) In order to define the appropriate scope of a block exemption regulation, the Commission must take into account the competitive conditions in the relevant sector. In this respect, the conclusions of the in-depth monitoring of the motor vehicle sector set out in the Evaluation Report on the operation of Commission Regulation (EC) No 1400/2002 of 28 May 2008 (6) and in the Commission Communication on The Future Competition Law Framework applicable to the Motor Vehicle sector of 22 July 2009 (7) have shown that a distinction should be drawn between agreements for the distribution of new motor vehicles and agreements for the provision of repair and maintenance services and distribution of spare parts. (10) As regards the distribution of new motor vehicles, there do not appear to be any significant competition shortcomings which would distinguish this sector from other economic sectors and which could require the application of rules different from and stricter than those set out in Regulation (EU) No 330/2010. The market-share threshold, the non-exemption of certain vertical agreements and the other conditions laid down in that Regulation normally ensure that vertical agreements for the distribution of new motor vehicles comply with the requirements of Article 101(3) of the Treaty. Therefore, such agreements should benefit from the exemption granted by Regulation (EU) No 330/2010, subject to all the conditions laid down therein. (11) As regards agreements for the distribution of spare parts and for the provision of repair and maintenance services, certain specific characteristics of the motor vehicle aftermarket should be taken into account. In particular, the experience acquired by the Commission in applying Regulation (EC) No 1400/2002 shows that price increases for individual repair jobs are only partially reflected in increased reliability of modern cars and lengthening of service intervals. These latter trends are linked to technological evolution and to the increasing complexity and reliability of automotive components that the vehicle manufacturers purchase from original equipment suppliers. Such suppliers sell their products as spare parts in the aftermarket both through the vehicle manufacturers’ authorised repair networks and through independent channels, thereby representing an important competitive force in the motor vehicle aftermarket. The costs borne on average by consumers in the Union for motor vehicle repair and maintenance services represent a very high proportion of total consumer expenditure on motor vehicles. (12) Competitive conditions in the motor vehicle aftermarket also have a direct bearing on public safety, in that vehicles may be driven in an unsafe manner if they have been repaired incorrectly, as well as on public health and the environment, as emissions of carbon dioxide and other air pollutants may be higher from vehicles which have not undergone regular maintenance work. (13) In so far as a separate aftermarket can be defined, effective competition on the markets for the purchase and sale of spare parts, as well as for the provision of repair and maintenance services for motor vehicles, depends on the degree of competitive interaction between authorised repairers, that is to say those operating within repair networks established directly or indirectly by vehicle manufacturers, as well as between authorised and independent operators, including independent spare parts suppliers and repairers. The latters’ ability to compete depends on unrestricted access to essential inputs such as spare parts and technical information. (14) Having regard to those specificities, the rules in Regulation (EU) No 330/2010, including the uniform market share threshold of 30 %, are necessary but are not sufficient to ensure that the benefit of the block exemption is reserved only to those vertical agreements for the distribution of spare parts and for the provision of repair and maintenance services for which it can be assumed with sufficient certainty that the conditions of Article 101(3) of the Treaty are satisfied. (15) Therefore, vertical agreements for the distribution of spare parts and for the provision of repair and maintenance services should benefit from the block exemption only if, in addition to the conditions for exemption set out in Regulation (EU) No 330/2010, they comply with stricter requirements concerning certain types of severe restrictions of competition that may limit the supply and use of spare parts in the motor vehicle aftermarket. (16) In particular, the benefit of the block exemption should not be granted to agreements that restrict the sale of spare parts by members of the selective distribution system of a vehicle manufacturer to independent repairers, which use them for the provision of repair or maintenance services. Without access to such spare parts, independent repairers would not be able to compete effectively with authorised repairers, since they could not provide consumers with good quality services which contribute to the safe and reliable functioning of motor vehicles. (17) Moreover, in order to ensure effective competition on the repair and maintenance markets and to allow repairers to offer end users competing spare parts, the block exemption should not cover vertical agreements which, although they comply with Regulation (EU) No 330/2010, nonetheless restrict the ability of a producer of spare parts to sell such parts to authorised repairers within the distribution system of a vehicle manufacturer, independent distributors of spare parts, independent repairers or end users. This does not affect the liability of producers of spare parts under civil law, or the ability of vehicle manufacturers to require the authorised repairers within their distribution system to only use spare parts that match the quality of the components used for the assembly of a certain motor vehicle. Moreover, in view of the vehicle manufacturers’ direct contractual involvement in repairs under warranty, free servicing, and recall operations, agreements containing obligations on authorised repairers to use only spare parts supplied by the vehicle manufacturer for those repairs should be covered by the exemption. (18) Finally, in order to allow authorised and independent repairers and end users to identify the manufacturer of motor vehicle components or of spare parts and to choose between alternative parts, the block exemption should not cover agreements by which a manufacturer of motor vehicles limits the ability of a manufacturer of components or original spare parts to place its trade mark or logo on those parts effectively and in a visible manner. (19) In order to allow all operators time to adapt to this Regulation, it is appropriate to extend the period of application of the provisions of Regulation (EC) No 1400/2002 relating to vertical agreements for the purchase, sale and resale of new motor vehicles until 31 May 2013. As regards vertical agreements for the distribution of spare parts and for the provision of repair and maintenance services, this Regulation should apply from 1 June 2010 so as to continue to ensure adequate protection of competition on the motor vehicle aftermarkets. (20) The Commission will, on a continuous basis, monitor developments in the motor vehicle sector and will take appropriate remedial action if competition shortcomings arise which may lead to consumer harm on the market for the distribution of new motor vehicles or the supply of spare parts or after-sales services for motor vehicles. (21) The Commission may withdraw the benefit of this Regulation, pursuant to Article 29(1) of Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty (8), where it finds in a particular case that an agreement to which the exemption provided for in this Regulation applies nevertheless has effects which are incompatible with Article 101(3) of the Treaty. (22) The competition authority of a Member State may withdraw the benefit of this Regulation pursuant to Article 29(2) of Regulation (EC) No 1/2003 in respect of the territory of that Member State, or a part thereof where, in a particular case, an agreement to which the exemption provided for in this Regulation applies nevertheless has effects which are incompatible with Article 101(3) of the Treaty in the territory of that Member State, or in a part thereof, and where such territory has all the characteristics of a distinct geographic market. (23) In determining whether the benefit of this Regulation should be withdrawn pursuant to Article 29 of Regulation (EC) No 1/2003, the anti-competitive effects that may derive from the existence of parallel networks of vertical agreements that have similar effects which significantly restrict access to a relevant market or competition therein are of particular importance. Such cumulative effects may, for example, arise in the case of selective distribution or non-compete obligations. (24) In order to strengthen supervision of parallel networks of vertical agreements which have similar anti-competitive effects and which cover more than 50 % of a given market, the Commission may by regulation declare this Regulation inapplicable to vertical agreements containing specific restraints relating to the market concerned, thereby restoring the full application of Article 101 of the Treaty to such agreements. (25) In order to assess the effects of this Regulation on competition in motor vehicle retailing, in the supply of spare parts and in after sales servicing for motor vehicles in the internal market, it is appropriate to draw up an evaluation report on the operation of this Regulation, HAS ADOPTED THIS REGULATION: CHAPTER I COMMON PROVISIONS Article 1 Definitions 1. For the purposes of this Regulation, the following definitions shall apply: (a) ‘vertical agreement’ means an agreement or concerted practice entered into between two or more undertakings each of which operates, for the purposes of the agreement or the concerted practice, at a different level of the production or distribution chain, and relating to the conditions under which the parties may purchase, sell or resell certain goods or services; (b) ‘vertical restraint’ means a restriction of competition in a vertical agreement falling within the scope of Article 101(1) of the Treaty; (c) ‘authorised repairer’ means a provider of repair and maintenance services for motor vehicles operating within the distribution system set up by a supplier of motor vehicles; (d) ‘authorised distributor’ means a distributor of spare parts for motor vehicles operating within the distribution system set up by a supplier of motor vehicles; (e) ‘independent repairer’ means: (i) a provider of repair and maintenance services for motor vehicles not operating within the distribution system set up by the supplier of the motor vehicles for which it provides repair or maintenance; (ii) an authorised repairer within the distribution system of a given supplier, to the extent that it provides repair or maintenance services for motor vehicles in respect of which it is not a member of the respective supplier’s distribution system; (f) ‘independent distributor’ means: (i) a distributor of spare parts for motor vehicles not operating within the distribution system set up by the supplier of the motor vehicles for which it distributes spare parts; (ii) an authorised distributor within the distribution system of a given supplier, to the extent that it distributes spare parts for motor vehicles in respect of which it is not a member of the respective supplier’s distribution system; (g) ‘motor vehicle’ means a self-propelled vehicle intended for use on public roads and having three or more road wheels; (h) ‘spare parts’ means goods which are to be installed in or upon a motor vehicle so as to replace components of that vehicle, including goods such as lubricants which are necessary for the use of a motor vehicle, with the exception of fuel; (i) ‘selective distribution system’ means a distribution system where the supplier undertakes to sell the contract goods or services, either directly or indirectly, only to distributors selected on the basis of specified criteria and where these distributors undertake not to sell such goods or services to unauthorised distributors within the territory reserved by the supplier to operate that system. 2. For the purposes of this Regulation, the terms ‘undertaking’, ‘supplier’, ‘manufacturer’ and ‘buyer’ shall include their respective connected undertakings. ‘Connected undertakings’ means: (a) undertakings in which a party to the agreement, directly or indirectly: (i) has the power to exercise more than half the voting rights; or (ii) has the power to appoint more than half the members of the supervisory board, board of management or bodies legally representing the undertaking; or (iii) has the right to manage the undertaking’s affairs; (b) undertakings which directly or indirectly have, over a party to the agreement, the rights or powers listed in point (a); (c) undertakings in which an undertaking referred to in point (b) has, directly or indirectly, the rights or powers listed in point (a); (d) undertakings in which a party to the agreement together with one or more of the undertakings referred to in points (a), (b) or (c), or in which two or more of the latter undertakings, jointly have the rights or powers listed in point (a); (e) undertakings in which the rights or the powers listed in point (a) are jointly held by: (i) parties to the agreement or their respective connected undertakings referred to in points (a) to (d); or (ii) one or more of the parties to the agreement or one or more of their connected undertakings referred to in points (a) to (d) and one or more third parties. CHAPTER II VERTICAL AGREEMENTS RELATING TO THE PURCHASE, SALE OR RESALE OF NEW MOTOR VEHICLES Article 2 Application of Regulation (EC) No 1400/2002 Pursuant to Article 101(3) of the Treaty, from 1 June 2010 until 31 May 2013, Article 101(1) of the Treaty shall not apply to vertical agreements relating to the conditions under which the parties may purchase, sell or resell new motor vehicles, which fulfil the requirements for an exemption under Regulation (EC) No 1400/2002 that relate specifically to vertical agreements for the purchase, sale or resale of new motor vehicles. Article 3 Application of Regulation (EU) No 330/2010 With effect from 1 June 2013, Regulation (EU) No 330/2010 shall apply to vertical agreements relating to the purchase, sale or resale of new motor vehicles. CHAPTER III VERTICAL AGREEMENTS RELATING TO THE MOTOR VEHICLE AFTERMARKET Article 4 Exemption Pursuant to Article 101(3) of the Treaty and subject to the provisions of this Regulation Article 101(1) of the Treaty shall not apply to vertical agreements relating to the conditions under which the parties may purchase, sell or resell spare parts for motor vehicles or provide repair and maintenance services for motor vehicles, which fulfil the requirements for an exemption under Regulation (EU) No 330/2010 and do not contain any of the hardcore clauses listed in Article 5 of this Regulation. This exemption shall apply to the extent that such agreements contain vertical restraints. Article 5 Restrictions that remove the benefit of the block exemption — hardcore restrictions The exemption provided for in Article 4 shall not apply to vertical agreements which, directly or indirectly, in isolation or in combination with other factors under the control of the parties, have as their object: (a) the restriction of the sales of spare parts for motor vehicles by members of a selective distribution system to independent repairers which use those parts for the repair and maintenance of a motor vehicle; (b) the restriction, agreed between a supplier of spare parts, repair tools or diagnostic or other equipment and a manufacturer of motor vehicles, of the supplier’s ability to sell those goods to authorised or independent distributors or to authorised or independent repairers or end users; (c) the restriction, agreed between a manufacturer of motor vehicles which uses components for the initial assembly of motor vehicles and the supplier of such components, of the supplier’s ability to place its trade mark or logo effectively and in an easily visible manner on the components supplied or on spare parts. CHAPTER IV FINAL PROVISIONS Article 6 Non-application of this Regulation Pursuant to Article 1a of Regulation No 19/65/EEC, the Commission may by regulation declare that, where parallel networks of similar vertical restraints cover more than 50 % of a relevant market, this Regulation shall not apply to vertical agreements containing specific restraints relating to that market. Article 7 Monitoring and evaluation report The Commission will monitor the operation of this Regulation and draw up a report on its operation by 31 May 2021 at the latest, having regard in particular to the conditions set out in Article 101(3) of the Treaty. Article 8 Period of validity This Regulation shall enter into force on 1 June 2010. It shall expire on 31 May 2023. This Regulation shall be binding in its entirety and directly applicable in all Member States. Done at Brussels, 27 May 2010. For the Commission The President José Manuel BARROSO (1) OJ 36, 6.3.1965, p. 533/65. (2) With effect from 1 December 2009, Article 81 of the EC Treaty has become Article 101 of the Treaty on the Functioning of the European Union. The two Articles are, in substance, identical. For the purposes of this Regulation, references to Article 101 of the Treaty on the Functioning of the European Union should be understood as references to Article 81 of the EC Treaty where appropriate. (3) OJ L 102, 23.4.2010, p. 1. (4) OJ L 336, 29.12.1999, p. 21. (5) OJ L 203, 1.8.2002, p. 30. (6) SEC(2008) 1946. (7) COM(2009) 388. (8) OJ L 1, 4.1.2003, p. 1.

Summary: Motor vehicles - block exemption from EU competition law Motor vehicles - block exemption from EU competition law SUMMARY OF: Regulation (EU) No 461/2010 - application of Article 101(3) of the Treaty on the Functioning of the European Union to categories of vertical agreements and concerted practices in the motor vehicle sector SUMMARY WHAT DOES THE REGULATION DO? Article 101(3) of the Treaty on the Functioning of the European Union (TFEU) exempts vertical agreements* which confer sufficient benefits to outweigh the anti-competitive effects. Regulation (EU) No 461/2010 grants the motor vehicle sector a specific block exemption for vertical agreements for the purchase, sale or resale of new motor vehicles and vertical agreements for the provision of repair and maintenance services for such vehicles and for the distribution of spare parts. Vertical agreements relating to the purchase, sale or resale of new motor vehicles Regulation (EU) No 461/2010 applies Regulation (EU) No 330/2010 to vertical agreements concerning the purchase, sale or resale of new motor vehicles. Vertical agreements relating to the motor vehicle aftermarket Regulation (EU) No 461/2010 also applies Regulation (EU) No 330/2010 to vertical agreements concerning conditions for the purchase, sale or resale of spare parts for motor vehicles, or for the provision of repair and maintenance services for motor vehicles, so long as these fulfil the requirements for exemption under Regulation (EU) No 330/2010, and do not contain any of the following hardcore restrictions described in Regulation (EU) No 461/2010: restriction of the sales of spare parts for motor vehicles by members of a selective distribution system; restriction, agreed between a supplier of spare parts or repair equipment and a manufacturer of motor vehicles, of the supplier’s ability to sell those goods to authorised or independent distributors, repairers or end users; restriction, agreed between a manufacturer of motor vehicles which uses components for the initial assembly of motor vehicles and the supplier of such components, of the supplier’s ability to visibly place its trade mark or logo on the components supplied. In accordance with Regulation No 19/65/EEC, when parallel networks of similar vertical restraints cover more than 50 % of a relevant market, the European Commission may decide that this regulation does not apply to vertical agreements that include specific restraints relating to that market. FROM WHEN DOES THE REGULATION APPLY? It entered into force on 1 June 2010 and will remain valid until 31 May 2023. BACKGROUND Competition: Motor vehicles - legislation KEY TERM * Vertical agreement: an agreement or concerted practice entered into between 2 or more undertakings each of which operates at a different level of the production or distribution chain, and relating to the conditions under which the parties may purchase, sell or resell certain goods or services. ACT Commission Regulation (EU) No 461/2010 of 27 May 2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to categories of vertical agreements and concerted practices in the motor vehicle sector (OJ L 129, 28.5.2010, pp. 52–57) RELATED ACTS Regulation No 19/65/EEC of 2 March of the Council on application of Article 85 (3) of the Treaty to certain categories of agreements and concerted practices (OJ 36, 6.3.1965, pp. 533–535). Successive amendments to Regulation No 19/65/EEC have been incorporated in the original text. This consolidated version is of documentary value only. Commission Regulation (EU) No 330/2010 of 20 April 2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to categories of vertical agreements and concerted practices (OJ L 102, 23.4.2010, pp. 1–7) last update 04.01.2016