According to the 2010 Horizontal Guidelines, an R&D agreement can restrict competition in various ways: “First, it may reduce or slow down innovation, leading to fewer or worse products coming to the market later than they otherwise would. Secondly, on product or technology markets the R&D cooperation may reduce significantly competition between the parties outside the scope of the agreement or it may make anti-competitive coordination on those markets likely, thereby leading to higher prices. A foreclosure problem may arise in the context of cooperation involving at least one player with a significant degree of market power (which does not necessarily amount to dominance) for a key technology and the exclusive exploitation of the results.”
The new proposed 2023 Horizontal Guidelines state moreover that “agreements relating to R&D restrict competition by object if their main purpose is not R&D, but to serve as a tool to engage in a cartel or in other by object infringements under Article 101(1), such as price fixing, output limitation, market allocation or restrictions of technical development”.
An R&D agreement may restrict technical development when, instead of cooperating for promoting technical and economic progress, the parties use the R&D cooperation to (a) prevent or delay the market entry of products or technologies, (b) coordinate the characteristics of products or technologies which are not covered by the R&D agreement or (c) limit the potential of a jointly developed product or technology when they bring such a product or technology individually to the market.
A R&D exemption under EU Competition law can be traced back to a notice issued in 1968 where the Commission stated inter alia that pure R&D co-operations generally do not restrict competition, on the condition that the parties are free to pursue their own research, and if there is no restriction regarding the use of the R&D results.
It should be stressed that the requirement already mentioned in the 1968 notice that the collaborating parties should be free to pursue their own research, and that there is no restriction regarding the use of the R&D results after the termination of the R&D collaboration is still applicable and unique for the EU. The US Joint R&D exemption does not stipulate a similar requirement. It shows that the EU is concerned with the outcome of the R&D collaboration, and that even though two firms may enter into a R&D agreement as non-competitors, they will often exit the collaboration as competitors or potential competitors. The spill-over or knowledge leaking a cooperation create between the parties may place them on equal footing in competition in innovation ex post the end of the collaboration.
On 29 November 2000, the first ‘modern’ block exemption for the application of Art. 101(3) to R&D agreements was adopted after the introduction of the so-called more economic approach. This block exemption was just one in a series of new block exemptions published since 1999 until 2004 where the Commission implemented the more economic approach. A major change to the block exemptions under the more economic approach was the introduction of market share ceilings. The 2000 block exemption expired in 2010 and was replaced by the current R&D BER published on 14 December 2010, which was made applicable to parties when their combined market share did not exceed 25 % of the relevant product and technology markets.
The new proposed 2023 R&D BER is more detailed than its predecessors, while it still stipulates a markets share ceiling of 25 % on the relevant product and technology markets; or in case of an R&D agreement involving paid-for research and development, the combined market share of the financing party and all the parties with which the financing party has entered into R&D agreements does not exceed 25% on the relevant product and technology markets. Moreover, where two or more of the parties to the R&D agreement are undertakings competing in innovation, the exemption shall apply for the duration of the research and development if, at the time the R&D agreement is entered into, there are three or more competing R&D efforts in addition to and comparable with those of the parties to the R&D agreement.
For the R&D BER to be applicable there is still conditions for the parties to have access to the final results and pre-existing know-how, and there is a list of hard-core clauses and excluded restrictions.
Taking the requirement that the parties to the R&D agreement should have access to the result and the pre-existing know-how first: the obligation has several limitations but as a general rule, the parties to the R&D agreement will often in theory exit the collaboration as at least potential competitors with access to the same R&D result and background know-how.
The hard-core clauses and exempted clauses resemble similar lists in other BERs, while there are some unique features mainly focus on the restriction of the freedom of the parties to carry out research and development independently or in cooperation with third parties.
It should be stressed that R&D agreements falling outside the R&D BER may still benefit from the application of Article 101(3) TFEU. As depicted the 2023 Horizontal Guidelines, generally, R&D collaborations are generally viewed as benign or procompetitive under Article 101 TFEU.