{"id":9989,"date":"2022-07-03T16:38:47","date_gmt":"2022-07-03T16:38:47","guid":{"rendered":"http:\/\/legalblog.ie\/eu-misc-exemptions\/"},"modified":"2022-11-23T21:26:30","modified_gmt":"2022-11-23T21:26:30","slug":"eu-misc-exemptions","status":"publish","type":"post","link":"https:\/\/legalblog.ie\/eu-misc-exemptions\/","title":{"rendered":"EU Misc Exemptions"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_63 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/legalblog.ie\/eu-misc-exemptions\/#Joint_R_D\" title=\"Joint R &amp; D\">Joint R &amp; D<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/legalblog.ie\/eu-misc-exemptions\/#Joint_Exploitation\" title=\"Joint Exploitation\">Joint Exploitation<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/legalblog.ie\/eu-misc-exemptions\/#Vertical_Agreements_Assessment\" title=\"Vertical Agreements Assessment\">Vertical Agreements Assessment<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/legalblog.ie\/eu-misc-exemptions\/#Potential_Negative_Effects\" title=\"Potential Negative Effects\">Potential Negative Effects<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/legalblog.ie\/eu-misc-exemptions\/#Possible_Justifications\" title=\"Possible Justifications\">Possible Justifications<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/legalblog.ie\/eu-misc-exemptions\/#Agency_Agreements_and_Competition_Law\" title=\"Agency Agreements and Competition Law\">Agency Agreements and Competition Law<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/legalblog.ie\/eu-misc-exemptions\/#Resale_Price_Maintenance\" title=\"Resale Price Maintenance\">Resale Price Maintenance<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/legalblog.ie\/eu-misc-exemptions\/#Price_Recommendations\" title=\"Price Recommendations\">Price Recommendations<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/legalblog.ie\/eu-misc-exemptions\/#Exclusive_Distribution\" title=\"Exclusive Distribution\">Exclusive Distribution<\/a><\/li><\/ul><\/nav><\/div>\n<h3><span class=\"ez-toc-section\" id=\"Joint_R_D\"><\/span>Joint R &amp; D<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>A block exemption applies to joint research and development on products and processes with joint exploitation of the results of the same. Research and development agreements may benefit from a block exemption.<\/p>\n<p>This applies even between competitors, provided that their combined share in the relevant market is less than 25% at the time the agreement is entered.\u00a0 The exemption continues so long as this is maintained. Agreements falling outside this criteria are subject to analysis under competition law.<\/p>\n<p>If parties are not in competition, the exemption applies for the duration of the research and development and for up to seven years of joint exploitation. If the parties are competitors, it will apply only if the relevant market share is less than 25%.\u00a0 If that share rises to 30%, a one-year period is allowed to unwind the arrangement.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Joint_Exploitation\"><\/span>Joint Exploitation<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Hard-core restrictions, including limitations of output, price fixing, and restriction of territories into which passive sales may be made, are prohibited. Each party must have access to the results of the research and development equally.<\/p>\n<p>If there is no joint exploitation, each must be free to exploit the rights. The rights may be limited to fields where they were not competitors before the agreement.<\/p>\n<p>Joint exploitation is limited to research and development, which produces intellectual property rights or know-how which are necessary for the manufacture of the products or for undertaking the relevant processes.\u00a0 \u00a0\u00a0Businesses which undertake to manufacture must fulfil orders for supplies by all the parties.<\/p>\n<p>The relevant product market is that of pre-existing products with which the products will compete if it is a new product.\u00a0 Where the product is entirely novel, the relevant market is that for existing products for which it will substitute.\u00a0 If the product is entirely new, it may be difficult to define the relevant market.<\/p>\n<p>If the conditions for the exemptions are not met, the research and development agreements may still be capable of being justified. There is less risk of anticompetitive effects where the research and development are at an early stage or outsourced. Where the agreements extend to production and marketing, anticompetitive risks increase significantly.<\/p>\n<p>The authorities will scrutinise the arrangement to consider whether there is a disguised cartel arrangement, foreclosure of the market, increased coordination and anti-competitive behaviour.<\/p>\n<p>A potential competitor is one who, in response to a small but permanent increase in price, is likely to undertake the necessary investments and arrangements in order to supply a new or improved product on the relevant market.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Vertical_Agreements_Assessment\"><\/span>Vertical Agreements Assessment<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>The Commission has published guidelines on vertical agreements which fall outside the block exemption regulation. They include selective distribution, exclusive distribution and similar restrictions. They may still benefit from exemption under Section 101(3).<\/p>\n<p>The assessment focuses on the difference between the position which would prevail but for the agreement and that which would prevail in the absence of the agreement on the relevant market.\u00a0 A reduction in competition amongst dealers in the same brand is less significant if there is intra-brand competition between dealers in different and competing brands.<\/p>\n<p>In order for vertical agreements to be restrictive of competition in their effect, they must affect actual or potential competition to such extent that on the relevant market, negative effects on prices, output, innovation, variety and quality of goods can be expected with a reasonable degree of probability.\u00a0 The likely negative effects must be appreciable.<\/p>\n<p>This may occur where one of the parties has obtained some degree of market power, and the agreement contributes to the maintenance or strengthening of that power or allows a party to exploit that power.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Potential_Negative_Effects\"><\/span>Potential Negative Effects<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>The Commission identifies the potential negative effects of vertical agreements as, including<\/p>\n<ul>\n<li>foreclosure of suppliers or buyers by raising barriers to entry or expansion;<\/li>\n<li>reduction of intra-brand competition between distributors of the same brand by softening competition between the buyer and competitors or by facilitating collusion;<\/li>\n<li>reduction of intra-brand competition by softening competition between suppliers and competitors or by facilitation of collusion;<\/li>\n<li>creating obstacles to market integration, in particular, limitations on the possibilities for consumers to purchase goods and services in the state of their choosing.<\/li>\n<\/ul>\n<p>Factors in considering negative effects include<\/p>\n<ul>\n<li>a reduction in inter-brand competition is more problematic than in intra-brand competition;<\/li>\n<li>exclusive arrangements are generally more anti-competitive than non-exclusive arrangements;<\/li>\n<li>restraints for non-branded goods and services are generally less harmful than restraints affecting branded goods and services;<\/li>\n<li>a \u00a0combination of vertical restraints generally aggravates negative effects.<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"Possible_Justifications\"><\/span>Possible Justifications<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Possible justifications for vertical restraints include<\/p>\n<ul>\n<li>solving the free rider by which one distributor may free ride on another\\&#8217;s promotional efforts;<\/li>\n<li>opening up and entering new markets;<\/li>\n<li>the supplier needs to have the product launched only with premium resellers;<\/li>\n<li>the investor may not commit to the needed investment without particular distribution arrangements being in place;<\/li>\n<li>transfer of significant knowhow to the distributor may justify a non-compete obligation;<\/li>\n<li>pricing too high may create a double marginalisation problem which could be avoided by imposing a maximum resale price in order to increase the retailer\u2019s sales efforts;<\/li>\n<li>economies of scale and distribution may be achieved by limiting the number of distributors;<\/li>\n<li>achieving uniformity and quality standardisation by creating a brand name through selective distribution or franchising;<\/li>\n<li>economies of scale and distribution achieved by limiting the number of distributors.<\/li>\n<\/ul>\n<p>The strongest case is usually for vertical restraints of limited duration, which help the introduction of new complex products or protect relationship-specific investments. Capital market imperfections may require that loans be provided to the distributor, with quantity and non-compete obligations.<\/p>\n<p>Factors in assessing the vertical restraints include<\/p>\n<ul>\n<li>nature of the agreement,<\/li>\n<li>nature of duration or percentage of total sales affected;<\/li>\n<li>the market position of competitors, in particular the market share. The stronger the position of competitors and the greater their number, the less likely parties are able to individually exercise market power and foreclose competition;<\/li>\n<li>the market position of buyer\u2019s; where customers have buyer power, this may prevent parties from exercising market power and resolve competition issues which would otherwise exist;<\/li>\n<li>entry barriers;<\/li>\n<li>maturity of market; negative effects are more likely in a mature market;<\/li>\n<li>level of trade; restrictions on intermediate goods are less likely to be problematic than restrictions placed on distributors of final goods;<\/li>\n<li>nature of products; negative effects are more likely with heterogeneous less expensive products;<\/li>\n<li>whether there is a network of similar agreements;<\/li>\n<li>whether it is imposed rather than agreed<\/li>\n<li>the regulatory environment;<\/li>\n<li>market behaviour such as price leadership, price discrimination and participation in previous cartels.<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"Agency_Agreements_and_Competition_Law\"><\/span>Agency Agreements and Competition Law<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>The Commission&#8217;s Guidelines on Vertical Restraints define agency agreements as agreements with persons who have the power to negotiate or conclude contracts on behalf of a principal, either in its own name or in the name of the principal, for the purchase or sale of goods and services by the principal.<\/p>\n<p>A genuine agent is simply a conduit.\u00a0 The principal bears all the commercial risks.\u00a0 In this case, the principal is fully responsible for the agent.<\/p>\n<p>An agreement will be regarded as an agency agreement for the purpose of Commission Guidelines if the agent does not become the owner of the goods purchased and does not supply the services.\u00a0 Typically, the agent will not maintain stocks or contribute to supply and purchase costs. It will not take responsibility for contractual non-performance.\u00a0 It is not obliged to invest in sales promotion.<\/p>\n<p>Relationships between principal and agent may infringe competition law.\u00a0 Exclusive agency agreements will not generally lead to anticompetitive effects.\u00a0 However, single branding and post-term non-compete provisions, which relate to inter-brand competition, may infringe completion law if they contribute to foreclosure of the relevant market in which the goods or services are purchased and sold.\u00a0 Some type of provision may be justified under the block exemption regulation.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Resale_Price_Maintenance\"><\/span>Resale Price Maintenance<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Resale price maintenance is generally anti-competitive.\u00a0 Exceptionally, minimum or fixed resale prices may allow efficiencies, which may be justified in terms of benefits to the consumer. If the supplier share is less than 30% of the market, an agreement recommending minimum resale prices may benefit from a block exemption.\u00a0 At levels higher than this, a competitive assessment may be required.<\/p>\n<p>Resale price maintenance is presumptively invalid and unlikely to be capable of being justified.\u00a0 Exceptionally, it may allow greater efficiency.\u00a0 If a new product is being introduced, retail price maintenance may be justified in order to establish the product during its initial phase.<\/p>\n<p>It may be necessary to fix resale prices in order to coordinate periodic low-price campaigns in a franchise network. It may be necessary to facilitate the sale of complex products and services.\u00a0 For example, it may allow retailers to provide resale services, which could not be provided if third parties could freely ride on their efforts.<\/p>\n<p>Where the party&#8217;s market share is less than 15%, de minimis provisions may apply in resellers&#8217; agreement, but not in respect of retail price maintenance.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Price_Recommendations\"><\/span>Price Recommendations<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Price recommendations to franchisees will not necessarily breach competition law, provided there is no concerted practices between the franchisor and franchisee in relation to the application of the prices concerned.\u00a0 Agreements relating to maximum resale or recommended prices may enjoy the benefit of the block exemption if the market shares are below 30%.<\/p>\n<p>A most favoured clause requires a supplier to give the purchaser price or terms at least as good as those provided to others.\u00a0 The supplier may be obliged to meet or better third-party offers made to the purchaser. Such clauses may allow buyers to benefit from reduced prices and promote competition.\u00a0 However, they may have anticompetitive effects by way of coordinating prices and facilitating collusion.<\/p>\n<p>Clauses which oblige the purchaser to disclose the identity of the third party, making the better offer, may assist collusion. In another context, it may facilitate exclusivity by enabling the distributor to match any third-party competitor.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Exclusive_Distribution\"><\/span>Exclusive Distribution<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>An exclusive distribution agreement grants a distributor exclusivity in respect of a particular category or type of goods or customer within a territory.\u00a0 The distributor is usually restricted from making sales outside of this territory.\u00a0 In contrast to an exclusive distributor, a selective distributor may sell to authorised dealers and end-users.\u00a0 They do not have exclusivity in terms of territory.<\/p>\n<p>Exclusive and selective distributor arrangements are potentially anti-competitive.\u00a0 They may reduce intra-brand competition, particularly when most or all suppliers are part of the exclusive distribution chain.<\/p>\n<p>Exclusive distribution agreements may come within the block exemption for vertical agreements.\u00a0 Where the market shares are less than 30% or where there are hard-core restrictions, the block exemption will not be available. Beyond the exemption, a competition analysis may uphold the agreement.<\/p>\n<p>In making the analysis, the market position of the supplier and its competitors will be important. Diminution of inter-brand competition will tend towards an anticompetitive finding. \u00a0However, strong inter-brand competition may allow an exemption.<\/p>\n<p>Where the market is dominated by a number of competitors, each operating its own distribution network, the risk of collusion and reduction of inter-brand competition will be considered. The block exemption may be withdrawn in cases where the supplier has less than 30% market share if there is any evidence of this occurring.<\/p>\n<p>Distribution agreements may bring benefits which allow the creation and support of a new brand through economies of scale.\u00a0 Provided a fair of these efficiencies is made available to the public, then the exemption may apply.<\/p>\n<p>The level of the distribution at which the restriction apply is relevant.\u00a0 Restrictions at lower levels are more likely to impede consumer choice. Restrictions higher up the chain may be less objectionable where they do not foreclose competition to the same extent.<\/p>\n<p>Resale restrictions may be permissible in this context, including restrictions on active sales outside the territory of the exclusive distributor and restrictions on sales to unauthorised dealers within the territory.\u00a0 Fixed or minimum resale prices and restrictions on resale are impermissible hard-core restrictions.<\/p>\n<!--themify_builder_content-->\n<div id=\"themify_builder_content-9989\" data-postid=\"9989\" class=\"themify_builder_content themify_builder_content-9989 themify_builder tf_clear\">\n    <\/div>\n<!--\/themify_builder_content-->\n","protected":false},"excerpt":{"rendered":"<p>Joint R &amp; D A block exemption applies to joint research and development on products and processes with joint exploitation of the results of the same. Research and development agreements may benefit from a block exemption. This applies even between competitors, provided that their combined share in the relevant market is less than 25% at [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"footnotes":""},"categories":[159],"tags":[],"_links":{"self":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts\/9989"}],"collection":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/comments?post=9989"}],"version-history":[{"count":3,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts\/9989\/revisions"}],"predecessor-version":[{"id":20711,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts\/9989\/revisions\/20711"}],"wp:attachment":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/media?parent=9989"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/categories?post=9989"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/tags?post=9989"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}