Antitrust Bites - Newsletter

Adoption of the new Regulations on research and development agreements and on specialisation agreements and the new Guidelines on horizontal co-operation agreements

The European Commission has adopted new regulations on the application of the block exemption from Article 101 of TFEU respectively to research and development (R&D) and to specialization agreements. The Commission has also adopted the new Guidelines on the applicability of Article 101 TFEU to horizontal cooperation agreements (Guidelines).

The two new regulations provide – as did the previous regulations they replace, i.e. Regulation (EU) No 1217/2010 and Regulation (EU) No 1218/2010 – for the benefit of the block exemption under Article 101 TFEU, subject to certain conditions, for agreements concerning research and development and specialization agreements.

The new Guidelines – which replace the 2011 Guidelines on horizontal co-operation agreements –provide undertakings with clearer and up-to-date guidance on the application of the block exemption regulations and they help market participants assess the compatibility of horizontal cooperation agreements – i.e. agreements between competitors – with EU competition rules.

The new Guidelines, as did the previous ones, provide guidance to assess the compatibility with Article 101 TFEU of the following categories of agreements: (i) Research and Development agreements; (ii) Production agreements; (iii) Purchasing agreements; (iv) Commercialisation agreements; and (v) Standardisation agreements. The new Guidelines include a chapter specifically dedicated to “Standard terms,” which were previously dealt with in the chapter on standardization agreements.

The new Guidelines also provide updated guidance for the assessment under competition law of exchanges of information between competing undertakings.

Among the novelties introduced by the new version of the Guidelines is the provision of a chapter providing criteria for the competitive assessment of agreements between competitors that pursue sustainability objectives (so-called “Sustainability agreements”). The Guidelines establish, inter alia, a “soft safe harbour” applicable to sustainability standardization agreements, providing that, under certain conditions, this type of agreement is unlikely to produce appreciable negative effects on competition. The Guidelines also provide guidance on whether a sustainability agreement fulfils the conditions for block exemption under Art. 101(3) TFEU.

Another major novelty of the Guidelines is the introduction of a section on mobile telecommunications network sharing agreements, included within the broader chapter on production agreements. It provides guidance on the competitive assessment of agreements under which mobile telecommunications network operators share the use of parts of their network infrastructure, including spectrum sharing agreements.

The block exemption regulations will enter into force on July 1, 2023. The Guidelines will enter into force on the date of their publication in the Official Journal of the European Union.

 

Extension of the duration of the Motor Vehicle Block Exemption Regulation and updating of the related Guidelines

With Regulation (EU) No. 822/2023, the European Commission has extended the validity of Regulation (EU) No. 461/2010 (the Motor Vehicle Block Exemption Regulation or MVBER; the Regulation) for a further five years. The Regulation, which was scheduled to expire on May 31, 2023, will remain in force until May 31, 2028.

The Regulation provides for an exemption, subject to certain conditions, from the prohibition contained in Article 101(1) of the Treaty on the Functioning of the European Union (TFEU) to categories of vertical agreements and concerted practices in the motor vehicle sector.

Underlying the extension of the Regulation's period of validity is that there has been no “significant change in the market conditions underpinning Regulation (EU) No 461/2010, therefore it can still be assumed with sufficient certainty that the vertical agreements and concerted practices in the motor vehicle sector to which that Regulation applies continue to satisfy the conditions set out in Article 101(3) of the Treaty”.

The extension of the duration of validity of the Regulation is accompanied by the updating of the related Supplementary Guidelines on vertical restraints in agreements for the sale and repair of motor vehicles and for the distribution of spare parts for motor vehicles.

The most relevant novelties of the updated Guidelines include:

• the extension of the principles on access to technical information essential for repair and maintenance activities by independent operators (such as independent repairers, spare parts manufacturers and distributors) to vehicle-generated data, to the extent that they are “essential for repair and maintenance”;
• an obligation to assess whether withholding information essential for repair and maintenance, including vehicle-generated data, would be a proportionate means of addressing specific safety concerns;
• the provision that withholding access to information essential for production and maintenance by the manufacturer, including vehicle-generated data, to members of the relevant authorized repair network may amount to an abuse of a dominant position under Article 102 TFEU.

 

European Commission v Google: New statement of objections for abuse of dominant position in online advertising technology markets

On June 14, 2023, the European Commission announced that it had sent Google and Alphabet a statement of objections, through which it contested the adoption of "self-preferencing" conduct considered able to distort competition in the online advertising technology sector (adtech) and constituting a possible abuse of a dominant position.

The Commission preliminarily found that Google would be dominant in the market for publisher ad servers (where it is active with its "DFP" platform) and in the market of programmatic ad buying tools for the open web (in which it operates through its "Google Ads" and "DV360" services).

According to the Commission, at least since 2014, Google would have abused of its dominant position in the said markets, by favoring its own ad intermediary service (ad exchange AdX):

• in the ad selection auctions announced through its DFP platform, for example, communicating in advance to AdX the value of the competitors’ best offer, that it should have beat in order to win the auction;
• granting its tools for the programmatic purchase of ads ("Google Ads" and "DV360") to bid mainly on AdX, making it the most attractive ad exchange.

The Commission qualified the conducts as self-preferencing practices contrary to the prohibition of abuse of dominant position. According to the Commission, such conducts were intended to give AdX a competitive advantage by hindering competing ad exchanges and strengthening AdX's position in the online ads supply chain as well as Google’s ability to charge high fees for its service.

According to its press release, the Commission preliminarily considered that any behavioral remedies would probably be ineffective in preventing the risk of Google continuing to adopt the "self-preferencing" conducts or to adopt similar ones. This was because of the "inherent" conflict-of-interest position in which Google operates, being active and dominant in both sides of the market and managing the largest flow of advertisements in existence. In light of this, in the Commission’s perspective, the only way to resolve the critical competitive issues would be to adopt structural remedies, involving Google divesting part of its services.

 

ICA adopts Communication relating to settlement procedures

With its decision of May 16, 2023, No. 30629, the Italian Competition Authority (AGCM) adopted the final version of the communication on settlement procedures (Communication relating to the application of article 14-quater of the Law of October 10, 1990, n. 287), following the public consultation that had been launched on February 2, 2023 and ended on the following March 24.

This communication was adopted in implementation of Article 14-quater of Law No. 287/1990 - introduced by the Annual law for the market and competition No. 118/2022 - which inter alia conferred on the Authority the task of defining "the procedural rules governing the presentation and assessment of settlement proposals [...] and the amount of the reduction of the fine [...] to be agreed in case of successful completion of the procedure" (paragraph 5).

The communication defines the settlement procedure distinguishing between (i) the start of the procedure and exploratory phases concerning the settlement; (ii) the initiation of proceedings: discussions to reach a settlement; (iii) settlement proposals; (iv) communication of the preliminary findings (CRI) and response of the parties; and (v) decision by the Authority and reduction of the fine upon completion of the settlement.

With reference to the initiation of the procedure and the “exploratory phases concerning the settlement”, it is provided that the AGCM can verify (on its own initiative only), within three months from the notification of the start of the investigation, whether there is an interest of the parties to any settlement.

If the Authority deems that the proceeding is suitable to be defined with a settlement, it invites the parties to express their interest in participating in discussions aimed to the possible settlement, within a term of no less than 15 days. Where the parties express their interest in this sense, once the declaration is received by the AGCM, they can no longer request the benefit of the non-application of the sanctions pursuant to art. 15-bis of Law 287/1990, but only the reduction pursuant to art. 15-ter within the term.

The procedure starts when, in light of the interest expressed by any parties to start settlement discussions, the AGCM exercises its right (there is not an obligation) to start the settlement procedure through bilateral contacts (the "discussions to reach a transaction" referred to in the text of the communication).

Where the Authority deems that the procedure is such as to bring to an agreement regarding the scope of potential charges and the range of probable fines, the parties can submit a settlement proposal within a deadline set by the AGCM of no less than 15 days.

The settlement proposals – which the parties, if authorized by the AGCM, can also present orally – must contain the elements listed in the communication, which include (i) an acknowledgment in clear and unequivocal terms of the parties' responsibility for the infringement; (ii) an indication of the maximum amount of the fine that the parties expect will be imposed on them by the Authority and that they would accept in the context of a settlement procedure; (iii) the parties' waiver of requesting access to the file, submitting briefs and requesting a hearing.

Following receipt of the CRI, if the latter reflects the settlement proposal presented to the Authority, the parties respond within 15 days confirming (in unequivocal terms) that the communication of the preliminary investigation results corresponds to the content of their settlement proposals.

The final decision of the AGCM takes place following this confirmation. In any case, this is without prejudice to the right of the Authority to adopt a final decision that deviates from the position expressed in the communication of the preliminary investigation results which contains the settlement proposals.

Finally, regarding the amount of the reduction of the sanction to be applied in case of a positive outcome of the settlement procedure, the text of the communication has made a substantial change compared to the text submitted to public consultation in the previous months.

And in fact, while the communication under consultation only provided that, if the settlement procedure were to be concluded positively, the AGCM would reduce "by at least 10% the amount of the sanction to be imposed", the latest version of the communication establishes that, if the settlement procedure is concluded positively, the Authority will reduce the amount of the fine to varying degrees depending on whether the proceeding concerns a secret cartel or another offence. In the first case, the AGCM applies a reduction of 10%, in the other cases, of 20%.