Commission Regulation (EC) No 2659/2000 of 29 November 2000 on the application of Article 81(3) of the Treaty to categories of research and development agreements (Text with EEA relevance)
Date: 2000-11-29
Institutions: European Commission
Subjects: application of EU law, intellectual property, inter-company agreement, research and development, restriction on competition

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Official Journal of the European Communities

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COMMISSION REGULATION (EC) No 2659/2000

of 29 November 2000

on the application of Article 81(3) of the Treaty to categories of research and development
agreements

(Text with EEA relevance)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

(3)

Having regard to the Treaty establishing the European
Community,

Having regard to Council Regulation (EEC) No 2821/71 of 20
December 1971 on application of Article 85(3) of the Treaty to
categories of agreements, decisions and concerted practices (1),
as last amended by the Act of Accession of Austria, Finland
and Sweden, and in particular Article 1(1)(b) thereof,

Having published a draft of this Regulation (2),

Having consulted the Advisory Committee on Restrictive Prac-
tices and Dominant Positions,

Whereas:

(1)

(2)

Regulation (EEC) No 2821/71 empowers the Commis-
sion to apply Article 81(3) (formerly Article 85(3)) of
the Treaty by regulation to certain categories of agree-
ments, decisions and concerted practices falling within
the scope of Article 81(1) which have as their object the
research and development of products or processes up
to the stage of industrial application, and exploitation of
including provisions regarding intellectual
the results,
property rights.

small

including

encourage

undertakings,

Article 163(2) of the Treaty calls upon the Community
to
and
medium-sized undertakings, in their research and tech-
nological development activities of high quality, and to
support their efforts to cooperate with one another.
to Council Decision 1999/65/EC of 22
Pursuant
December 1998 concerning the rules for the participa-
tion of undertakings, research centres and universities
and for the dissemination of research results for the
implementation of the fifth framework programme of
the European Community (1998-2002) (3) and Commis-
sion Regulation (EC) No 996/1999 (4) on the imple-
mentation of Decision 1999/65/EC,
indirect research
and technological development (RTD) actions supported
the
under
Community are required to be carried out cooperatively.

programme

framework

fifth

the

of

(1) OJ L 285, 29.12.1971, p. 46.
(2) OJ C 118, 27.4.2000, p. 3.
(3) OJ L 26, 1.2.1999, p. 46.
(4) OJ L 122, 12.5.1999, p. 9.

Agreements on the joint execution of research work or
the joint development of the results of the research, up
to but not including the stage of industrial application,
generally do not fall within the scope of Article 81(1) of
the Treaty. In certain circumstances, however, such as
where the parties agree not to carry out other research
and development in the same field, thereby forgoing the
opportunity of gaining competitive advantages over the
other parties, such agreements may fall within Article
81(1) and should therefore be included within the scope
of this Regulation.

Pursuant to Regulation (EEC) No 2821/71, the Commis-
sion has,
in particular, adopted Regulation (EEC) No
418/85 of 19 December 1984 on the application of
Article 85(3) of the Treaty to categories of research and
development agreements (5), as last amended by Regula-
tion (EC) No 2236/97 (6). Regulation (EEC) No 418/85
expires on 31 December 2000.

effective protection of

A new regulation should meet the two requirements of
ensuring
competition and
providing adequate legal security for undertakings. The
pursuit of these objectives should take account of the
need to simplify administrative supervision and the legis-
lative framework to as great an extent possible. Below a
certain level of market power it can, for the application
of Article 81(3), in general be presumed that the positive
effects of research and development agreements will
outweigh any negative effects on competition.

Regulation (EEC) No 2821/71 requires the exempting
regulation of the Commission to define the categories of
agreements, decisions and concerted practices to which
it applies, to specify the restrictions or clauses which
may, or may not, appear in the agreements, decisions
and concerted practices, and to specify the clauses which
must be contained in the agreements, decisions and
concerted practices or the other conditions which must
be satisfied.

It is appropriate to move away from the approach of
listing exempted clauses and to place greater emphasis
on defining the categories of agreements which are
exempted up to a certain level of market power and on
specifying the restrictions or clauses which are not to be

(4)

(5)

(6)

(7)

(5) OJ L 53, 22.2.1985, p. 5.
(6) OJ L 306, 11.11.1997, p. 12.

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contained in such agreements. This is consistent with an
economics based approach which assesses the impact of
agreements on the relevant market.

larly, non-competitors may agree to limit their right to
exploitation to one or more technical fields of applica-
tion to facilitate cooperation between parties with
complementary skills.

(8)

(9)

(10)

(11)

(12)

(13)

(14)

For the application of Article 81(3) by regulation, it is
not necessary to define those agreements which are
capable of falling within Article 81(1). In the individual
assessment of agreements under Article 81(1), account
has to be taken of several factors, and in particular the
market structure on the relevant market.

The benefit of the block exemption should be limited to
those agreements for which it can be assumed with
sufficient certainty that they satisfy the conditions of
Article 81(3).

Cooperation in research and development and in the
exploitation of the results generally promotes technical
and economic progress by increasing the dissemination
of know-how between the parties and avoiding duplica-
tion of research and development work, by stimulating
new advances through the exchange of complementary
know-how, and by rationalising the manufacture of the
products or application of the processes arising out of
the research and development.

The joint exploitation of results can be considered as the
natural consequence of joint research and development.
It can take different forms such as manufacture, the
exploitation of intellectual property rights that substan-
tially contribute to technical or economic progress, or
the marketing of new products.

Consumers can generally be expected to benefit from
the increased volume and effectiveness of research and
through the introduction of new or
development
improved products or services or the reduction of prices
brought about by new or improved processes.

In order to attain the benefits and objectives of joint
research and development the benefit of this Regulation
should also apply to provisions contained in research
and development agreements which do not constitute
the primary object of such agreements, but are directly
related to and necessary for their implementation.

In order to justify the exemption, the joint exploitation
should relate to products or processes for which the use
of the results of the research and development is deci-
sive, and each of the parties is given the opportunity of
exploiting any results that interest it. However, where
research institutes or undertakings
academic bodies,
which supply research and development as a commer-
cial service without normally being active in the exploi-
tation of results participate in research and development,
they may agree to use the results of research and devel-
opment solely for the purpose of further research. Simi-

(15)

(16)

(17)

The exemption granted under this Regulation should be
limited to research and development agreements which
do not afford the undertakings the possibility of elimi-
nating competition in respect of a substantial part of the
products or services in question.
is necessary to
exclude from the block exemption agreements between
competitors whose combined share of the market for
products or services capable of being improved or
replaced by the results of the research and development
exceeds a certain level at the time the agreement is
entered into.

It

In order to guarantee the maintenance of effective
competition during joint exploitation of
the results,
provision should be made for the block exemption to
cease to apply if the parties' combined share of the
market for the products arising out of the joint research
and development becomes too great. The exemption
should continue to apply,
irrespective of the parties'
market shares, for a certain period after the commence-
ment of joint exploitation, so as to await stabilisation of
their market shares, particularly after the introduction of
an entirely new product, and to guarantee a minimum
period of return on the investments involved.

not

should

exempt

This Regulation
agreements
containing restrictions which are not indispensable to
attain the positive effects mentioned above. In principle
certain severe anti-competitive restraints such as limita-
tions on the freedom of parties to carry out research and
development in a field unconnected to the agreement,
the fixing of prices charged to third parties, limitations
on output or sales, allocation of markets or customers,
and limitations on effecting passive sales for the contract
products in territories reserved for other parties should
be excluded from the benefit of the block exemption
established by this Regulation irrespective of the market
share of the undertakings concerned.

(18)

The market share limitation,
the non-exemption of
certain agreements, and the conditions provided for in
this Regulation normally ensure that the agreements to
which the block exemption applies do not enable the
participating undertakings to eliminate competition in
respect of a substantial part of the products or services
in question.

(19)

In particular cases in which the agreements falling under
this Regulation nevertheless have effects incompatible
with Article 81(3) of the Treaty, the Commission may
withdraw the benefit of the block exemption.

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(20) Agreements between undertakings which are not
competing manufacturers of products capable of being
improved or replaced by the results of the research and
development will only eliminate effective competition in
research and development in exceptional circumstances.
It is therefore appropriate to enable such agreements to
benefit from the block exemption irrespective of market
share and to address such exceptional cases by way of
withdrawal of its benefit.

(21) As research and development agreements are often of a
long-term nature, especially where the cooperation
extends to the exploitation of the results, the period of
validity of this Regulation should be fixed at 10 years.

(22)

(23)

This Regulation is without prejudice to the application
of Article 82 of the Treaty.

the primacy of
In accordance with the principle of
Community law, no measure taken pursuant to national
laws on competition should prejudice the uniform
application throughout
the
Community competition rules or the full effect of any
those rules,
measures adopted in implementation of
including this Regulation,

the common market of

HAS ADOPTED THIS REGULATION:

Article 1

Exemption

Pursuant to Article 81(3) of the Treaty and subject to the
1.
provisions of this Regulation, it is hereby declared that Article
81(1) shall not apply to agreements entered into between two
or more undertakings (hereinafter referred to as ‘the parties’)
which relate to the conditions under which those undertakings
pursue:

(a) joint research and development of products or processes
and joint exploitation of the results of that research and
development;

(b) joint exploitation of the results of research and develop-
ment of products or processes jointly carried out pursuant
to a prior agreement between the same parties; or

(c) joint research and development of products or processes

excluding joint exploitation of the results.

This exemption shall apply to the extent that such agreements
(hereinafter referred to as ‘research and development agree-
ments’) contain restrictions of competition falling within the
scope of Article 81(1).

The exemption provided for in paragraph 1 shall also
2.
apply to provisions contained in research and development
agreements which do not constitute the primary object of such
agreements, but are directly related to and necessary for their
implementation, such as an obligation not to carry out, inde-
pendently or together with third parties, research and develop-

ment in the field to which the agreement relates or in a closely
connected field during the execution of the agreement.

The first subparagraph does, however, not apply to provisions
which have the same object as the restrictions of competition
enumerated in Article 5(1).

Article 2

Definitions

For the purposes of this Regulation:

1.

2.

‘agreement’ means an agreement, a decision of an associa-
tion of undertakings or a concerted practice;

‘participating undertakings’ means undertakings party to
the research and development agreement and their respec-
tive connected undertakings;

3.

‘connected undertakings’ means:

(a) undertakings in which a party to the research and

development agreement, directly or indirectly:

(i) has the power to exercise more than half the

voting rights,

(ii) has the power to appoint more than half the
members of
the supervisory board, board of
management or bodies legally representing the
undertaking, or

(iii) has the right to manage the undertaking's affairs;

(b) undertakings which directly or indirectly have, over a
party to the research and development agreement, the
rights or powers listed in (a);

(c) undertakings in which an undertaking referred to in (b)
has, directly or indirectly, the rights or powers listed in
(a);

(d) undertakings in which a party to the research and
development agreement together with one or more of
the undertakings referred to in (a), (b) or (c), or in
which two or more of the latter undertakings, jointly
have the rights or powers listed in (a);

(e) undertakings in which the rights or the powers listed

in (a) are jointly held by:

(i) parties to the research and development agreement
or their respective connected undertakings referred
to in (a) to (d), or

(ii) one or more of the parties to the research and
development agreement or one or more of their
connected undertakings referred to in (a) to (d) and
one or more third parties;

4.

‘research and development’ means
the acquisition of
know-how relating to products or processes and the
carrying out of theoretical analysis, systematic study or
experimentation, including experimental production, tech-
nical testing of products or processes, the establishment of
the necessary facilities and the obtaining of intellectual
property rights for the results;

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5.

6.

7.

8.

‘product’ means a good and/or a service, including both
intermediary goods and/or services and final goods and/or
services;

‘contract process’ means a technology or process arising
out of the joint research and development;

‘contract product’ means a product arising out of the joint
research and development or manufactured or provided
applying the contract processes;

‘exploitation of
the results’ means the production or
distribution of the contract products or the application of
the contract processes or the assignment or licensing of
intellectual property rights or
the communication of
know-how required for such manufacture or application;

9.

‘intellectual property rights’
rights, copyright and neighbouring rights;

includes industrial property

10.

‘know-how’ means a package of non-patented practical
information, resulting from experience and testing, which
is secret, substantial and identified: in this context, ‘secret’
means that the know-how is not generally known or easily
accessible; ‘substantial’ means that the know-how includes
information which is indispensable for the manufacture of
the contract products or the application of the contract
processes;
the know-how is
described in a sufficiently comprehensive manner so as to
make it possible to verify that it fulfils the criteria of
secrecy and substantiality;

‘identified’ means

that

11. research and development, or exploitation of the results,
are carried out ‘jointly’ where the work involved is:

(a) carried out by a joint team, organisation or under-

taking,

(b) jointly entrusted to a third party, or

(c) allocated between the parties by way of specialisation
in research, development, production or distribution;

12.

is
‘competing undertaking’ means an undertaking that
supplying a product capable of being improved or
replaced by the contract product (an actual competitor) or
an undertaking that would, on realistic grounds, undertake
the necessary additional
investments or other necessary
switching costs so that it could supply such a product in
response to a small and permanent increase in relative
prices (a potential competitor);

13.

‘relevant market for the contract products’ means the rele-
to which the
vant product and geographic market(s)
contract products belong.

or undertakings which supply research and development as a
commercial service without normally being active in the
exploitation of results may agree to confine their use of the
results for the purposes of further research.

3. Without prejudice to paragraph 2, where the research
and development agreement provides only for joint research
and development, each party must be free independently to
exploit the results of the joint research and development and
any pre-existing know-how necessary for the purposes of such
exploitation. Such right to exploitation may be limited to one
or more technical fields of application, where the parties are
not competing undertakings at the time the research and devel-
opment agreement is entered into.

intellectual property

Any joint exploitation must relate to results which are
4.
protected by
constitute
know-how, which substantially contribute to technical or
economic progress and the results must be decisive for the
manufacture of the contract products or the application of the
contract processes.

rights or

Undertakings charged with manufacture by way of
5.
specialisation in production must be required to fulfil orders
for supplies from all the parties, except where the research and
development agreement also provides for joint distribution.

Article 4

Market share threshold and duration of exemption

1. Where the participating undertakings are not competing
undertakings, the exemption provided for in Article 1 shall
apply for the duration of the research and development. Where
the results are jointly exploited, the exemption shall continue
to apply for seven years from the time the contract products
are first put on the market within the common market.

2. Where two or more of the participating undertakings are
competing undertakings, the exemption provided for in Article
1 shall apply for the period referred to in paragraph 1 only if,
at the time the research and development agreement is entered
into, the combined market share of the participating undertak-
ings does not exceed 25 % of the relevant market for the
products capable of being improved or
replaced by the
contract products.

After the end of the period referred to in paragraph 1, the
3.
exemption shall continue to apply as long as the combined
market share of the participating undertakings does not exceed
25 % of the relevant market for the contract products.

Article 3

Conditions for exemption

Article 5

The exemption provided for in Article 1 shall apply

1.
subject to the conditions set out in paragraphs 2 to 5.

2.
All the parties must have access to the results of the joint
research and development for the purposes of further research
or exploitation. However, research institutes, academic bodies,

Agreements not covered by the exemption

1.
The exemption provided for in Article 1 shall not apply
to research and development agreements which, directly or
indirectly,
in isolation or in combination with other factors
under the control of the parties, have as their object:

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(a) the restriction of the freedom of the participating undertak-
ings to carry out research and development independently
or in cooperation with third parties in a field unconnected
with that to which the research and development relates or,
after its completion, in the field to which it relates or in a
connected field;

(b) the prohibition to challenge after completion of

the
research and development the validity of intellectual prop-
erty rights which the parties hold in the common market
and which are relevant to the research and development or,
after the expiry of the research and development agree-
ment, the validity of intellectual property rights which the
parties hold in the common market and which protect the
results of the research and development, without prejudice
to the possibilty to provide for termination of the research
and development agreement in the event of one of the
parties challenging the validity of such intellectual property
rights;

(c) the limitation of output or sales;

(d) the fixing of prices when selling the contract product to

third parties;

(e) the restriction of

the participating
the customers that
undertakings may serve, after the end of seven years from
the time the contract products are first put on the market
within the common market;

(f) the prohibition to make passive sales of the contract prod-

ucts in territories reserved for other parties;

(g) the prohibition to put the contract products on the market
or to pursue an active sales policy for them in territories
within the common market that are reserved for other
parties after the end of seven years from the time the
contract products are first put on the market within the
common market;

(h) the requirement not to grant licences to third parties to
manufacture the contract products or to apply the contract
processes where the exploitation by at least one of the
parties of the results of the joint research and development
is not provided for or does not take place;

(i) the requirement to refuse to meet demand from users or
resellers in their respective territories who would market
the contract products
territories within the
in other
common market; or

(j) the requirement to make it difficult for users or resellers to
obtain the contract products from other resellers within the
common market, and in particular to exercise intellectual
property rights or take measures so as to prevent users or
resellers from obtaining, or from putting on the market
within the common market, products which have been
lawfully put on the market within the Community by
another party or with its consent.

2.

Paragraph 1 shall not apply to:

(a) the setting of production targets where the exploitation of
the results includes the joint production of the contract
products;

(b) the setting of sales targets and the fixing of prices charged
to immediate customers where the exploitation of
the
results includes the joint distribution of the contract prod-
ucts.

Article 6

Application of the market share threshold

For the purposes of applying the market share threshold

1.
provided for in Article 4 the following rules shall apply:

(a) the market share shall be calculated on the basis of the
market sales value; if market sales value data are not avail-
able, estimates based on other reliable market information,
including market sales volumes, may be used to establish
the market share of the undertaking concerned;

(b) the market share shall be calculated on the basis of data

relating to the preceding calendar year;

(c) the market share held by the undertakings referred to in
point 3(e) of Article 2 shall be apportioned equally to each
undertaking having the rights or the powers listed in point
3(a) of Article 2.

If the market share referred to in Article 4(3) is initially
2.
not more than 25 % but subsequently rises above this level
without exceeding 30 %, the exemption provided for in Article
1 shall continue to apply for a period of two consecutive
calendar years following the year in which the 25 % threshold
was first exceeded.

3.
If the market share referred to in Article 4(3) is initially
not more than 25 % but subsequently rises above 30 %, the
exemption provided for in Article 1 shall continue to apply for
one calendar year following the year in which the level of 30 %
was first exceeded.

The benefit of paragraphs 2 and 3 may not be combined

4.
so as to exceed a period of two calendar years.

Article 7

Withdrawal

The Commission may withdraw the benefit of this Regulation,
pursuant to Article 7 of Regulation (EEC) No 2821/71, where,
either on its own initiative or at the request of a Member State
or of a natural or legal person claiming a legitimate interest, it
finds in a particular case that a research and development

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agreement to which the exemption provided for in Article 1
applies nevertheless has effects which are incompatible with
the conditions laid down in Article 81(3) of the Treaty, and in
particular where:

(a) the existence of the research and development agreement
substantially restricts the scope for third parties to carry
out research and development in the relevant field because
of the limited research capacity available elsewhere;

(b) because of the particular structure of supply, the existence
of the research and development agreement substantially
restricts the access of third parties to the market for the
contract products;

(c) without any objectively valid reason, the parties do not
exploit the results of the joint research and development;

(d) the contract products are not subject in the whole or a
substantial part of
to effective
competition from identical products or products consid-
ered by users as equivalent in view of their characteristics,
price and intended use;

the common market

(e) the existence of the research and development agreement
would eliminate effective competition in research and
development on a particular market.

Article 8

Transitional period

The prohibition laid down in Article 81(1) of the Treaty shall
not apply during the period from 1 January 2001 to 30 June
2002 in respect of agreements already in force on 31
December 2000 which do not satisfy the conditions for
exemption provided for in this Regulation but which satisfy the
conditions for exemption provided for in Regulation (EEC) No
418/85.

Article 9

Period of validity

This Regulation shall enter into force on 1 January 2001.

It shall expire on 31 December 2010.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels, 29 November 2000.

For the Commission

Mario MONTI

Member of the Commission