European Competition Law provides a wide-ranging review of the European rules relating to competition: restrictive agreements, abuse of a dominant position, impact of intellectual property rights, procedure, merger control, State aid.

European Competition Law

Exemptions may be granted by means of regulation under Article 101(3), which states that the provisions of paragraph 1 of Article 101 may be declared inapplicable in the case of certain “categories” of agreement .
This block exemption option has been widely used by the Commission. By authority of the Council , several regulations  have been adopted in the areas of distribution and intellectual pro …

Early regulations

Exemptions may be granted by means of regulation under Article 101(3), which states that the provisions of paragraph 1 of Article 101 may be declared inapplicable in the case of certain “categories” of agreement .

This block exemption option has been widely used by the Commission. By authority of the Council , several regulations  have been adopted in the areas of distribution and intellectual property. The Commission has also put into effect the Council's authorization  in respect of standardization, research and development and specialization agreements . All those regulations had common characteristics. First of all, they often made the exemption conditional upon the participating undertakings not exceeding certain thresholds of economic power. Secondly, they usually made a distinction between three types of contractual provision: black clauses, white and gray clauses. Black clauses prevent the grant of a block exemption (e.g. exclusive purchase agreements, exclusive distribution or franchise agreements between competing manufacturers, absolute territorial protection clauses included in some distribution contracts which prohibit parallel imports from territory to territory, or clauses limiting the freedom of franchisees or licensees to set prices). White clauses were those that did not adversely affect competition (e.g. those whose purpose was to preserve the identity and the reputation of the network with regard to franchises, or that were justified by the exploitation of a patent in a patent licensing agreement). Gray clauses related to all provisions which, in the same way as exclusivity clauses or prohibition of active competition outside the license area, are restrictive of competition but can qualify for a block exemption. Gradually, these regulations were deemed too cumbersome, too authoritative and, finally, too “legalistic”.

See, particularly for examples of sectoral regulations: Council Regulation No 411/2004 of 26 February 2004 repealing EEC Regulation No 3975/87 and amending EEC Regulation No 3976/87 and Regulation No 1/2003, in respect of air transport between the European Union and non-Member countries; Commission Regulation No 1459/2006 of 28 September 2006 concerning the implementation of Article 81(3) of the Treaty to certain categories of agreements, decisions or concerted practices having as their object consultations on passenger tariffs on scheduled air services and slot allocation at airports; Council Regulation No 1419/2006 of 25 September 2006 repealing Regulation (EEC) No 4056/86 laying down detailed rules for the application of Articles 85 and 86 of the Treaty to maritime transport and amending Regulation No 1/2003 as regards the extension of its scope to include cabotage and international tramp services.

See Regulation No 19/65/EEC of 2 March 1965 of the Council on application of Article 85(3) of the Treaty [now 101(3) TFEU] to certain categories of agreements and concerted practices, OJ L 36 of 6 March 1965 p. 533-535: article 1-1 of the regulation provides that, "[...] the Commission may by regulation declare that Article 81(1) shall not apply to categories of agreements to which only two undertakings are party and;a) whereby one party agrees with the other to supply only to that other certain goods for resale within a defined area of the common market; or, whereby one party agrees with the other to purchase only from that other certain goods for resale; or whereby the two undertakings have entered into obligations, as in the two preceding subparagraphs, with each other in respect of exclusive supply and purchase for resale;b) which include restrictions imposed in relation to the acquisition or use of industrial property rights - in particular of patents, utility models, designs or trademarks - or to the rights arising out of contracts for assignment of, or the right to use, a method of manufacture or knowledge relating to the use or to the application of industrial processes".

See Regulation No 67/67 of 23 March 1967, OJ 57 of 25 March 1967, since replaced by Regulations No 1983/1984 and No 83/83 of 22 June 1983, OJ L 173 30 June 1983, concerning application of Article 81(3) EC, to the categories of exclusive distribution and exclusive purchasing agreements respectively (see below, No 102 et seq.); Regulation No 123/85 of 12 December 1984, replaced by Regulation No 1475/95 of 28 June 1995, OJ L 145 29 June 1995, concerning the application of Article 81(3) EC to categories of motor vehicle distribution and servicing agreements (see below, No 116 et seq.); Regulation No 4087/88 of 30 November 1988, OJL 359 of 28 December 1988, concerning the application of Article 81(3) EC to categories of franchise agreements (see below, No 124 et seq.); Regulation No 2349/84 of 23 July 1984, OJL 219 of 16 August 1984, on the application of Article 81(3) of the Treaty to certain categories of patent licensing agreements; Regulation No 556/89 of 30 November 1988, OJ L 61 4 March 1989, concerning the application of Article 81(3) EC to categories of know-how licensing agreements, both replaced by Regulation No 240/96 of 31 January 1996, OJ L 31 9 February 1996, concerning the application of Article 81(3) EC to certain categories of technology transfer agreements. 

See Council Regulation No 2871/71 of 20 December 1971, OJ L 285 of 29 December 1971, 46, concerning the application of Article 81(3) of the Treaty to categories of agreements, decisions and concerted practices, amended by Council Regulation No 2743/72 of 19 December 1972, OJ L 291 December 28 1972, 144.

See Regulation No 3604/82 of 23 December 1982, replaced by Regulation No 417/85 of 19 December 1984, amended by Regulation No 151/93 of 23 December 1992, concerning the application of Article 81(3) EC to categories of specialization agreements (see below, No 84); Regulation No 418/85 of 19 December 1984, OJ L 53 of 22 February 1985, amended by Regulation No 151/93 of 23 December 1992, concerning the application of Article 81(3) EC to categories of research and development agreements.

Aware of the difficulties raised by the traditional rules, which were sometimes comparable to actual standard-form contracts, the EU authorities decided to develop more flexible rules on exemptions and get rid of the white and gray clauses and the famous “all or nothing” rule (according to which a non-exempted anticompetitive clause could cause the exemption to be refused) and replaced them with economic power thresholds, calculated by market shares, and below which the agreement is exempted. Today, the regulations no longer establish lists of exempted clauses but merely identify clauses which will prevent the exemption even if the market share thresholds are not exceeded. Black clauses deprive the agreement in its entirety of the benefit of the exemption. Red clauses cannot qualify for an exemption relative to a determined obligation but do not call into question the exemption for the overall agreement.

On 22 December 1999, Regulation No 2790/1999 was adopted on the implementation of Article Article 81(3) EC to categories of vertical agreements  and was later supplemented by guidelines . This regulation constituted the first culmination of the reform of the rules of competition undertaken by the Commission to improve legal certainty for businesses and lighten the workload of the EU authorities.

The scope of the regulation was very wide as it applied to virtually all vertical agreements, i.e. all agreements between undertakings located at different levels of the production and distribution chain having as their object the buying, selling or resale of certain goods and services. It replaced exemption Regulations No 1983/83 on exclusive distribution, No 1984/83 on exclusive purchasing and No 4087/88 on franchises and covered agreements relating to goods and services not intended for resale, bringing selective distribution - which was previously covered by the rule of reason  - within its scope. Only motor vehicle distribution agreements were excluded, as, according to the Commission, the specificities of the sector justified the retaining of a specific system of rules. The new regulation offered more freedom for businesses. The return to contractual freedom was nonetheless a factor of legal uncertainty. To evaluate the lawfulness of their agreements, undertakings must refer to the guidelines, although, as the Court of Justice has reiterated, they have no legal value.

Regulation No 2790/1999 was replaced by Regulation No 330/2010 on 20 April 2010 , itself replaced by Regulation No 2022/270 of 10 May 2022  which came into force on 1 June 2022, accompanied by new guidelines . The provision sets a double market share threshold. To benefit from exemption, the supplier and the distributor each must hold a market share that does not exceed 30% and the distributor's market share is calculated on the market for the contract goods or services in question (Guidelines, point 23), on condition that agreements contain no black clauses (minimum and fixed resale price clause, clause granting absolute territorial protection, clause prohibiting cross-supplies between selective distributors, etc.: Article 4) and that they respect certain requirements (conditions relating to contractual and post-contract non-compete obligations, prohibition of a selective clubs of brands by suppliers: Article 5). In other words, the regulation lays down a presumption of legality of those agreements, described as a safe harbor in the guidelines (pts 48 et seq.). Above that threshold, there can be no presumption that a vertical agreement will usually give rise to objective advantages which will compensate the disadvantages which they create for competition and there is no presumption that such an agreement is either caught by Article 101(1) or that it fails to satisfy the conditions of Article 101(3) (Regulation No 2022/720, recital 9). 

The Commission's position has also becomes more flexible towards hardcore restrictions. Although the anticompetitive nature of the agreement may be presumed where it contains such restrictions, such a presumption is now rebuttable (Guidelines, point 180 et seq.). Exemption will be granted if it is established that including a black clause in the agreement results in efficiency gains and that the conditions laid down in Article 101(3) TFEU are fulfilled. The prohibition of retail price maintenance is no longer absolute. According to the Guidelines, resale price maintenance may not result in restricting competition and may lead to efficiencies, especially in the case of a new product launch or the organization of a short-term coordinated low-price campaign (pt 197). However, according to the Court, there is no need to give a broad interpretation to the provisions bringing an agreement within the scope of the block exemption, since the undertaking can always apply for an individual exemption . The new text expressly prohibits direct or indirect restrictions on internet sales (art. 4(e)). However, according to the Court of Justice, it is not necessary to give a broad interpretation to the provisions which bring agreements or practices within the block exemption as undertakings have the option, in all circumstances, to seek an individual exemption .

Under the new regulation direct or indirect restrictions of online sales are expressly prohibited (Art. 4(e)). However the Commission recognizes to selective distribution network suppliers the right to impose quality standards for the use of the website as well as for in-store sales or restrictions related to distribution channels, such as marketplaces (Guidelines, pt 208). 

Moreover, upfront access payments paid by suppliers which allow them to get access to the network and remunerate services provided by the distributor for a certain period are exempted below the 30% threshold. Above, they are likely to result in anticompetitive foreclosure since they induce the supplier to channel its products through only one distributor and constitute a barrier to entry for other distributors (Guidelines points 379 et seq.). The same applies for category management agreements (points 385 et seq.).

If any of the undertakings party to the agreement has more than 30% of market share, it will only be able to qualify for an individual exemption, which is now retroactive and runs from the conclusion of the agreement. Where the regulation is not applicable, the Guidelines should enable undertakings to verify the compatibility of their agreement with the provisions of Article 101(1) TFEU.

Finally, as well as the Commission's faculty to withdraw the benefit of the regulation or declare it inapplicable, Regulation No 1/2003 allows Member States to withdraw an exemption on their own territory where that territory constitutes a distinct geographic market and the exempted agreement includes effects incompatible with the conditions set out in Article 101(3) TFEU, particularly when competition is significantly restricted due to a cumulative effect. This power of national withdrawal may lead to the inconsistent application of competition law.

The Commission gave up the idea of purely and simply substituting the new general regulation for the Motor Vehicle Regulation No 1400/2002, which expired on 31 May 2010 preferring to apply different legal systems for distribution (extension of the Motor Vehicle Regulation for three years, then implementation of the General Regulation) and the aftermarket. According to the Commission , the existence of a separate market for the motor vehicle aftermarket, on which effective competition depends on the degree of interaction between authorized repairers which are dependent on a network and authorized independent operators, implies the provision of specific conditions of exemption, in particular to ensure the security of end-users and to guarantee repairers' access to essential inputs, such as spare parts and technical information (point 13). These specific features make it necessary to provide for “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” (point 15). New Motor Vehicle Regulation No 461/2010 of 27 May 2010  thus adopted an original solution consisting of making the aftermarket principally subject to the conditions set out in the general vertical restraints regulation, No 330/2010, and secondarily to provisions specific to the automobile sector. In other words, agreements which relate to the aftermarket must, in order to qualify for the block exemption, satisfy the conditions laid down in Regulation No 330/2010 and must not contain any hardcore restrictions as listed in Article 5 of Regulation No 461/2010. In practice, authorized repair agreement will rarely benefit from the block exemption as, according to the Commission, each brand has, on the spare parts and after-sales markets, a market share of over 30%, with the exception of utility vehicle and heavy goods vehicles, in respect of which the Commission appears to accept that they constitute one spare part and after-sales market insofar as purchasers make their decisions based on the overall cost of buying and maintaining the business purchases concerned.  In view of its expiry in 2022, on 8 November 2018, the Commission launched an evaluation roadmap of the Vertical Restraints Regulation, followed on 12 October 2020 by a public consultation, in the context of the expiry of the regulation on 31 May 2023, in order to verify the appropriateness of allowing it to lapse, extending it or amending it in order to take account of the most recent market developments. In its evaluation report of 28 May 2021, the Commission considered that no major revision of the regulation was necessary given the absence of significant developments over the last decade. However, the text does need to be updated to take into account, in particular, the importance that access to data is likely to have as a competitive factor. It therefore launched a new public consultation on 6 July 2022 on a draft regulation that would extend the validity of the current regulation for five years, as well as on draft guidelines taking into account current emerging trends, such as those resulting from the digitization of vehicles and new forms of mobility. Finally, Regulation No 2023/822 of 17 April 2023 extended the validity of Regulation No 461/2010 until 31 May 2028 .

As part of these reforms, the Commission has also revised the texts relating to horizontal agreements by adopting two new regulations, one on specialization agreements  and the other on research and development agreements , as well as issuing guidelines . These texts, which reflected new Commission policy on block exemptions  have been replaced by two new regulations: Regulation No 1217/2010 of 14 December 2010 relative to research and development agreements itself replaced by Regulation No 2023/1066 of 1 June 2023, Regulation No 1218/2010 of 14 December 2010, on specialization agreements, itself replaced by Regulation No 2023/1067 of 1 June 2023 - supplemented by Guidelines on the applicability of Article 101 to horizontal cooperation agreements . These regulations lay down a presumption of legality of agreements between competitors below a market share threshold of 25% for R&D agreements and 20% for specialization agreements. Horizontal agreements are not presumed to be in violation of Article 101(1) just because they exceed those thresholds.The new texts also determine which restrictions are not exempted. These are black clauses for specialization agreements: price-fixing, limiting output or sales, market-sharing and the setting of quotas (Regulation No 2023/1067, Article 5); for research and development agreements: clauses restricting the activities of the parties, non-compete clauses, price fixing and market-sharing, limitation of production or sale, and restriction of active or passive sales (Regulation No 2023/1066, Art. 8). 

The Guidelines apply to agreements which do not fall within the scope of the regulations, and to certain other types of cooperation between competitors (e.g. grouped purchases, joint marketing) . As with vertical restraints, they should allow the parties to assess the compatibility of agreements with Article 101(1), taking account of the economic context, the market power of the parties as well as structural factors, and to measure the effect of cooperation between undertakings.They thus establish an analytical framework applicable for the assessment of each agreement (pt 1.2). As horizontal agreements can frequently entail exchanges of information, they are now handled specifically in the guidelines, which lay down general principles of assessment that can be transposed to the analysis of all horizontal restraints (pt 2). Under the Guidelines, it is not necessary to examine the actual effects on competition and the market of agreements that have as their object a restriction of competition by means of price fixing, output limitation or sharing of markets or customers, since these agreements are presumed to have negative market effects . 

Commission Notice No 2000/C 291/01, Guidelines on Vertical Restraints of 13 October 2000.

Regulation No 2658/2000 of 29 November 2000, OJ L 304 of 5 December 2000, 3.

Regulation No 2659/2000 of 29 November 2000, OJ L 304 of 5 December 2000, 7.

Commission Notice No 2001/C 3/02 of 6 January 2001, OJ C 3 of 6 January 2001, 2.

They did not draw up any list of exempted clauses but defined agreements that could be exempted up to a certain market power assessed by reference to the combined market share held by the participating undertakings: 20% for specialization agreements (Regulation No 2658/2000, Article 4), 25%, for research and development agreements (Regulation No 2659/2000, Article 4); the market share was calculated on the basis of the value, or, if there was no value, on the basis of the sales volume (Regulation No 2658/2000 and Regulation No 2659/2000, Article 6).

Commission Communication No 2011/C 11/01 of 14 January 2011, Guidelines on the applicability of Article 101 of the Treaty on the Functioning of the European Union to horizontal co-operation agreements.

Where an agreement contains different stages of cooperation, the “center of gravity” of the cooperation determines which section of the guidelines applies to the agreement in question: Commission Guidelines No 2011/C 11/01 of 14 January 2011, pt 13.

For an application, see Case T-357/06 Koninklijke Wegenbouw Stevin BV, Judgment of 27 September 2012, LawLex201700001055JBJ.

Regulation No 330/2010 of 23 April 2010, OJ L102, 1. 

Regulation No 2022/70, OJEU L 134 of 11 May 2022, 4

Commission Notice No 2022/C 4238, Guidelines on Vertical Restraints of 28 June 2022.

Case C-439-09 Pierre Fabre Dermo-Cosmétique SAS, Judgment of 13 October 2011, LawLex201200000028JBJ.

On the question of dual pricing, see GRALL and LAMY.

This category covers various practices, such as slotting allowances and pay-to-stay fees.

See also Commission Notice 2023/C 133 I/01 - Additional guidelines on vertical restraints in motor vehicle sales and repair and motor vehicle spare parts distribution agreements, which takes into account the adoption of Regulation No 2022/720.

"New generation" regulations

A block exemption regulation confers ex officio the benefit of the exemption on agreements falling within its scope. An agreement must affect trade between Member States to be the object of an exemption regulation. This is not the case for agreements falling below the thresholds set by the Commission. On the other hand, an agreement, which falls under the Article 101(1) prohibition due to the cumulative effect of a series of similar agreements is likely to benefit from a block exemption .

Contractual freedom is a fundamental principle even in the presence of an exemption regulation. It therefore follows that a clause not covered by the regulation is not presumed to be unlawful and thus cannot be declared null and void. If a contract covered by the regulation includes clauses to which the regulation does not apply, the only logical conclusion is that they will not be covered by the block exemption. They can however only be rendered null and void if they are effectively anticompetitive .

Case 47/76 De Norre v Brouwerij Concordia [1977] ECR 65, LawLex200400002803JBJ.

See Case 10/86 VAG France v Magne [1986] ECR 4071, LawLex200500004435JBJ: the entry into force of the motor vehicle regulation does not have the effect of rendering null and void those clauses in dealership agreements that are not compliant with it. See also Case C-384/13 Estacion de Servicio Pozuelo, Order of 4 December 2014, not available in English: the fact that an agreement does not meet the criteria set out in a block exemption regulation does not necessarily mean that it appreciably affects competition and is incompatible with Article 101(1) TFEU.

European Competition Law

76. Early regulations

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Les notions juridiques connexes

76. Early regulations

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Les notions juridiques connexes

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