Glossary of competition terms

This Glossary was prepared by DG COMP and the OECD for non-competition specialists. Each term is enriched with references of national case laws from the e-Competitions Bulletin. (© European Union - © OECD)

Specialisation agreement

Agreement between undertakings relating to the conditions under which they specialise in the production of a narrow or specific range of goods and/or services. Agreements on specialisation can contribute to improving the production or distribution of goods, because the undertakings concerned can concentrate on the manufacture of certain products and thus operate more efficiently and supply the products more cheaply. Specialisation agreements are divided into agreements whereby one participant gives up the manufacture of certain products or provision of certain services in favour of another participant (unilateral specialisation), agreements whereby each participant gives up the manufacture of certain products or provision of certain services in favour of another participant (reciprocal specialisation), and agreements whereby the participants undertake to jointly manufacture certain products or provide certain services (joint production). The issue is covered by a specific block exemption regulation.

See: 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.

© European Commission

A provision permitting firms to form an agreement to specialize in the production of a narrow or specific range of product lines in order to realize "product specific economies" (see Economies of Scale). In several industries, firms may be manufacturing at sub-optimal scales, multiple and duplicate products. Specialization agreements are aimed towards facilitating re-alignment of production in order to achieve longer production runs of specific products and realize efficiencies. A formal provision for these agreements and exemption from the application of competition laws may be necessary in order to assure firms they will not be viewed as forming an illegal combination. Specialization agreements are particularly relevant in the context of small economies where the market may not be large enough for firms to exploit potential product specific economies of scale.

© OECD

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