Insights CMA opens Consultation on draft horizontal agreements guidance

On 25 January 2023, the UK’s Competition and Market Authority (CMA) opened a Consultation on their draft guidance relating to how Competition law rules on anti-competitive agreements apply to horizontal agreements. The deadline for responses is 8 March 2023.

By way of background “horizontal agreements” are those between actual and potential competitors. The Competition Act 1998 (“CA 98”) prohibits anti-competitive agreements and certain practices between businesses and decisions by associations of businesses (e.g., trade associations) which have as their object or effect the prevention, restriction, or distortion of competition within the UK (the “Chapter 1 Prohibition”). Agreements can be individually exempted from the Chapter 1 prohibition if they meet certain conditions relating to the benefits they produce (e.g., based on efficiencies, benefits to consumers).

Block exemption rules also apply for certain categories of horizontal agreements (including “Specialisation” Agreements (i.e., joint production agreements for the manufacture of goods or the preparation of services which can potentially improve production processes and lower costs and result in lower prices for consumers) and R&D Agreements (which can facilitate early breakthroughs in research and product development and support more efficient resource allocation through collaborative R&D).

The CMA’s proposed Horizontal Guidance aims to help businesses self-assess common types of agreements – with guidance on e.g., when horizontal agreements are likely to restrict competition, are likely to be individually exempt (as they produce benefits which outweigh any restriction on competition) and when block exemptions will apply.

Key changes the CMA’s proposals include are:

  • When finalised, the new UK guidance will replace EU Horizontal Cooperation Guidelines (which have been in place since 2011).
  • Guidance which focuses on what is best for UK consumers and businesses.
  • Several changes from the EU’s 2011 guidance, including:
    • additional guidance on joint ventures and mobile infrastructure sharing agreements, bidding consortia;
    • greater clarity on legitimate joint purchasing agreements and buyer cartels;
    • clarifications on when information exchange is permitted between actual / potential competitors – and how to assess various aspects of information exchange; and
    • further guidance on standardisation agreements, such as how to assess effective access to standards through the grant of licences to standard-essential IPR on fair, reasonable and non-discriminatory terms, restrictions on participation in the development in certain standards and how to assess disclosures of information relating to intellectual property rights.

Guidance is also planned by the CMA for businesses on how competition law applies to agreements between competitors to achieve more environmentally sustainable outcomes.  A separate consultation will cover this.

The EU also consulted on EU Horizontal Cooperation Guidelines and block exemptions in 2022 – and an update is due shortly.