European Commission Seeks Comments on Revised Horizontal Guidelines Draft

On 1 March 2022, the European Commission launched a public consultation inviting stakeholders to comment on a revised Horizontal Block Exemption Regulations on Research & Development and Specialisation (HBERs) draft, as well as on a revised draft of the guidelines on the applicability of Article 101 of the Treaty on the Functioning of the European Union (TFEU) to horizontal co-operation agreements (Horizontal Guidelines). Comments are due no later than 26 April 2022.

This more general antitrust public consultation aims at drafting revised versions of existing normative texts and should not be confused with the European Commission’s more targeted “Call for Evidence” regarding a new framework for standard-essential patents (SEPs). Comments in response to the Call for Evidence must be submitted by 9 May 2022, and the new framework “may combine legislative and non-legislative action.” (For more information on the European Commission’s Call for Evidence, click here.) While these two EU public consultations are separate, they and their corresponding EU policies overlap on the question of SEPs.

Chapter 7 of the revised Horizontal Guidelines draft concerns SEP antitrust issues, such as the question of standardisation agreements and their compliance with EU antitrust law. The public consultation provides stakeholders in the SEP licensing and standardisation fields an opportunity to ensure that their interests will be considered during the drafting process of the revised Horizontal Guidelines.

The overall objective of the Horizontal Guidelines is to provide guidance on the European Commission’s application of the general norms prohibiting anticompetitive market behaviour set out in Art. 101 (1) and 101 (3) of the TFEU. The Horizontal Guidelines are de facto binding as EU courts and businesses use them to comply with Art. 101 (1) and (3) of the TFEU and to anticipate the European Commission’s enforcement of these norms.

The revised draft of the Horizontal Guidelines takes into consideration the evaluation process following a public consultation in 2019 that gave stakeholders the opportunity to review the 2011 version of the Horizontal Guidelines, which is currently in force. In the revised draft, Chapter 7 focuses on standardisation agreements as follows:

• The new draft proposes to introduce more flexibility in the effects analysis by allowing (under specific circumstances) more limited participation in the development of a standard.
  • A standardisation agreement should not be considered to lead to
    restrictive effects on competition under Article 101 (1) of the TFEU if
    the restriction on the participants is limited in time with a view
    to progressing quickly and if, at major milestones, all competitors have an
    opportunity to be involved in terms of continuing the development of the
    standard (marginal no. 496).
  • A standardisation agreement should be considered as removing potential
    negative effects resulting from limited participation stakeholders as long as
    stakeholders are kept informed and consulted on the work in progress. The
    objective is to promote procedures that recognize the collective representation
    of stakeholders (e.g., consumers)
    (497).
• The requirements of “good faith disclosure” should be specified.
  • The intellectual property rights (IPRs) disclosure should
    at least include the patent (or application) number and should
    be updated as the standard develops/when the standard is adopted, especially if
    there are any changes on the essentiality or validity of the listed IPRs (483).
  • Only when IPR information is not yet publicly available may IPR holders declare
    so-called “blanket-disclosures.”
    These are non-specific disclosures that include a (likely) rights claim to certain
    technology that could be important to the standard (483).
• The new draft provides more methods for the assessment of the economic value of IPRs to determine when a proposal is fair, reasonable and non-discriminatory (FRAND).
  • The economic value can be based on the current added value of
    the IPR, but the market success of products unrelated to the patented
    technology must not be considered (486).
  • If an independent expert assessment is obtained, it may be appropriate
    to refer to disclosures before the industry has developed the standard (ex ante disclosure) including individual
    or aggregate royalties for the relevant IPR, in the context of a specific
    standard development process (487).
  • Similarly, a comparison of the licensing terms in the IPR holder’s agreements
    with those of other implementers of the same standard may serve as an indication
    of whether a proposed royalty rate is FRAND (487).
• Standard development agreements should not, in principle, restrict competition within the meaning of Art. 101 (1) of the TFEU if they increase transparency by disclosing information on the characteristics and added value of each IPR to a standard (492), or provide for the ex ante disclosure of a maximum accumulated royalty rate by all IPRs (500).