Lost in Semantics
Pursuing the “Lost in” post series initiated a few weeks ago, and chasing possible inconsistencies in EU competition law, I recently noticed that Regulation 2658/2000 and its accompanying set of Guidelines on Horizontal Cooperation Agreements use a different wording to regulate the – almost – same categories of horizontal agreements.
Regulation 2658/2000 block exempts “specialisation agreements“. This expression is in turn defined under Article 1 of the Regulation. Pursuant to this provision, specialisation agreements cover:
“(a) unilateral specialisation agreements; or (b) reciprocal specialisation agreements; or (c) joint production agreements”.
Now, let’s turn to the Guidelines. At §§78 and following, the Guidelines refer generally to “production agreements” rather than to “specialisation agreements“. This, in and of itself, is already slightly confusing as what was a sub-example in the Regulation (see (c) above), becomes a generic type of agreements. The Guidelines further blur the dividing lines defined in the Regulation in stating that “production agreements” cover (§79):
“Joint production agreements; … unilateral or reciprocal specialisation agreements; … and subcontracting agreements (emphasis added)”…
The bottom line: messy semantics do not make good law.
(Image possibly subject to copyrights. Source here)
Chillin'Competition 
Lost in a maze of definitions!
Writing my thesis on a topic relating to horizontal agreements and the self-contradictory terminologies found here and there are not making things easier. I shall console myself with the idea that I am not the only one feeling confused.
I will agree..bad semantics=bad law.
Is legal certainty merely a romantic notion?
C
9 December 2009 at 1:24 pm
Don’t start me off on the sloppy drafting of EU legislation otherwise my BP will start rising again! And as for judgments of the EU courts, they are clouded in obscurity. No doubt these are frequent complaints from us common law lawyers.
James Byrne
9 December 2009 at 2:53 pm
The most problematic contradiction is however a substantive one:
– According to the Guidelines, agreements falling below the market share thresholds (15%, 20% and 25%) are not restrictive of competition within the meaning of Article 81(1) EC
– The block exemption regulation, on the other hand, applies only to the extent that the agreements falling below the relevant market share threshold are caught by Article 81(1) EC
This is also true for verticals and technology licensing, of course
… and far from obvious to explain to students!
Bagnole
9 December 2009 at 7:46 pm
Absolutely right, and thanks for all the comments. This is really good.
To come back on Bagnole’s point. The funny thing is that the guidelines thresholds(soft law) have a stronger normative effect (escape an outright 81(1) issue) than the BER thresholds, though enshrined in a Regulation (fulfill only conditions for article 81(3) EC).
Now, to be fair with the guidelines, they do also indicate that an agreement < market share threshold is unlikely to fulfill the 81(3) conditions (see, for instance, §130 of the guidelines: "In any event, at that level of market share it is likely that the conditions of Article 81(3) explained below are fulfilled by the agreement in question".)
Nicolas Petit
10 December 2009 at 11:10 am