Horizontal cooperation: from the dark side to the light?
Recent enforcement action shows that companies involved in data sharing and data pooling or sustainability cooperation need to tread carefully. Digitisation and sustainability are blurring the lines between pro-competitive cooperation and anti-competitive collusion.
A clearer demarcation of these lines will take place with the revision of the EU Horizontal Rules, but final adoption is more than a year away; no reason for the Commission to let companies off the hook in the meantime. The Commission has imposed its first-ever fine for limiting technical development and is looking into “the dark side of pooling and sharing data”.
Until the finalised Horizontal Rules shed more light, companies should stay away from the dark side of horizontal cooperation by drawing guidance from other sources. The Commission’s promised guidance on technical cooperation and the Dutch competition authority’s draft sustainability guidelines may help. Companies may also reach out for guidance.
Consultation on Horizontal Rules
On 13 July 2021, the Commission launched a public consultation to gather feedback on the policy options set out in its inception impact assessment on the revision of the EU Horizontal Block Exemption Regulations and the Horizontal Guidelines (the “Horizontal Rules”). Apart from policy options specifically related to the current R&D Block Exemption Regulation and Specialisation Block Exemption Regulation, the inception impact assessment acknowledges the need for more clarity on horizontal ‘green’ and ‘digital’ cooperation arrangements that have emerged since the adoption of the current Horizontal Rules.
Stakeholders have until 5 October 2021 to submit their views on the inception impact assessment. These views will be used to draw up draft texts of the revised EU Horizontal Block Exemption Regulations and Guidelines, scheduled to be released for public consultation at the beginning of 2022. Finalised Horizontal Rules should be in place by the end of 2022.
Guidance: towards the light
Until then, companies will have to resort to the Commission’s decisional practice for antitrust guidance on novel cooperation models.
The Commission’s decision against five car manufacturers for having colluded on emissions technology standards is just that: a novel case on ‘green’ cooperation gone bad. A fine of EUR 875 million was imposed for this ‘tech cartel’. According to the Commission, the regular discussions between Daimler, BMW, Volkswagen, Audi and Porsche on the development of technology to reduce harmful emissions from diesel cars exceeded their legitimate scope. During these technical meetings, the car manufacturers agreed not to compete on emission cleaning beyond the EU’s minimum emissions standards, despite having the technology available to do so.
The novelty of the case – the first decision ever to be based solely on a restriction of technical development – resulted in a 20% fine reduction for the car manufacturers (Daimler received full immunity from fines for having revealed the cartel to the Commission). It also led the Commission to issue guidance to the car manufacturers on the fine line between legitimate technical cooperation and illegal technical collusion. Once published, this guidance will serve as a beacon for other companies involved in R&D cooperation. For now, the rule of thumb is that companies cannot restrict competition on innovation by choosing to refrain from exploiting the available technology to its full potential.
Another case with a promise of more guidance is the Commission’s ongoing investigation into Insurance Ireland, an association of Irish insurers. The Commission’s preliminary view is that Insurance Ireland restricts access to Insurance Link, a data-sharing platform with information on non-life insurance claims. Insurance Link’s information enables its users to better assess risk and detect potential fraud, thereby setting motor vehicle insurers without access to these data at a competitive disadvantage on the Irish motor vehicle insurance market. Competition Commissioner Vestager intends to bring this “dark side of pooling and sharing data” into the light in the revised Horizontal Rules by including guidance for companies to better self-assess data pooling and data sharing agreements. Until then (and if this case is finalised before then), the outcome of this case may help companies point themselves in the right direction.
Until publication of the revised Horizontal Rules (due end of 2022), companies embarking on ‘green’ or ‘digital’ collaborations should keep an eye on the Commission’s decisional practice for guidance as to how they should proceed. The Dutch Competition Authority’s draft guidelines on sustainability agreements may also provide a helpful hand (see our September 2020 Newsletter).
Following this, any companies that are still in the dark should take the Commission and the Dutch Competition Authority up on their invitation to reach out. Not only is this a possibility for novel cases since the 2004 Notice on guidance letters, it is also an explicitly mentioned option for green and digital cooperation arrangements (see also our September 2020 and November 2019 Newsletters).
This article was published in the Competition Newsletter of August 2021. Other articles in this newsletter:
Are your distribution contracts ready for the revised VBER?
ACM issues first excessive pricing fine in pharma
Court rules ACM can use accidental evidence found in dawn raids
Netherlands FDI regime protecting national security is getting closer
CJEU clarifies jurisdiction for follow-on damage claims
Amsterdam Court of Appeal rules on the applicable law to air freight
Court assesses threshold for substantiating cartel damage plausibility