Monday, March 28, 2011
Posted by D. Daniel Sokol
Lars Kjølbye (Covington & Burling) discusses Escaping Effects Analysis: The Commission's New Approach to Restrictions by Object.
ABSTRACT: The Commission must be commended for having issued new Guidelines on horizontal cooperation agreements that, in terms of the analytical framework, in many ways is a clear improvement over the previous version of the Guidelines. The Commission makes clear in the new Guidelines that the analysis of horizontal cooperation agreements cannot be limited to considering cost commonalities. It is necessary to consider also the express or implicit restrictions contained in the agreement and how the agreement affects the parties' incentives. Cost commonalities form part of this latter analysis, but are only part of the picture. It is likely that users will find the new Guidelines more useful than their predecessor when engaging in self-assessment.
However, the Commission has also used the revision of the Guidelines to expand the notion of restrictions by object and reduce the number of cases in which it is required to prove likely adverse effects on competition before the parties are required to invoke the efficiency defense and provide evidence that the four conditions of Article 101(3) TFEU are satisfied. In the case of restrictions by object adverse effects on competition are presumed. A more inclusive approach to restrictions by object means that in many more cases it falls on the parties to make a credible efficiency defense before the Commission is required to show likely effects on competition.
It is submitted that this change in policy is unjustified as a matter of law and economics and that it risks creating uncertainty for a whole range of agreements that for good reason have never attracted much antitrust scrutiny. This is illustrated by the approach in the new Guidelines to joint production agreements.