The European Commission Guidelines on Horizontal Cooperation Agreements

Horizontal cooperation agreements are arrangements between two or more competitors in the same market to cooperate in certain aspects of their business. The European Commission recognizes that these agreements can lead to benefits for consumers, such as increased product quality and lower prices, but also acknowledges that they can raise competition concerns. To address these concerns, the European Commission released Guidelines on Horizontal Cooperation Agreements in 2011. This article will explore these guidelines in detail.

What are horizontal cooperation agreements?

Horizontal cooperation agreements are agreements between competitors who operate at the same level of the supply chain, such as two firms that produce the same product or offer the same service. The scope of these agreements can vary, from joint research and development initiatives to sharing distribution networks.

The European Union recognizes that these agreements can be pro-competitive, as they can lead to cost savings and increased innovation. However, because these agreements involve cooperation between competitors, they can also raise competition concerns, such as price fixing and market allocation.

The Guidelines on Horizontal Cooperation Agreements

The Guidelines on Horizontal Cooperation Agreements were released by the European Commission in 2011 to provide clarity and guidance on the assessment of these agreements. The guidelines outline the types of cooperation agreements that are typically pro-competitive and those that are likely to harm competition.

The guidelines recognize that some horizontal cooperation agreements can give rise to efficiencies that benefit consumers. For example, cooperation between firms can lead to lower production costs and increased innovation. The guidelines also acknowledge that some horizontal cooperation agreements can facilitate market entry, particularly for smaller competitors.

The guidelines outline two main types of horizontal cooperation agreements that can raise competition concerns: price-fixing agreements and market allocation agreements.

Price-fixing agreements involve competitors agreeing to fix prices or other commercial terms, such as discounts or rebates. These agreements are considered per se illegal and can result in significant fines.

Market allocation agreements involve competitors agreeing to divide up markets, territories, or customers. These agreements can lead to reduced competition and higher prices.

Other types of horizontal cooperation agreements, such as joint R&D initiatives and production sharing agreements, are more likely to be pro-competitive. These agreements can lead to cost savings and increased innovation, which can benefit consumers.

Conclusion

Horizontal cooperation agreements between competitors can raise both competition concerns and benefits for consumers. The European Commission Guidelines on Horizontal Cooperation Agreements provide guidance on the types of agreements that are likely to harm competition and those that are likely to benefit consumers. It is important for companies engaging in horizontal cooperation to be aware of these guidelines and to seek legal advice to ensure compliance with EU competition rules.