Competition horizontal cooperation rules (debate) 
President
The next item is the debate on the oral question to the Commission by Mrs Bowles, on behalf of the Committee on Economic and Monetary Affairs, on the review of the competition horizontal cooperation rules - B7-0565/2010).
José Manuel García-Margallo y Marfil
Madam President, Commissioner, the two block exemption regulations, one of which refers to specialisation agreements and the other to research and development, will expire on 31 December of this year. The Commission has drawn up two legislative proposals: two proposals for regulations that are before this House to replace the regulations that are now coming to an end.
A lot of water has flowed under the bridge since the initial regulations were adopted. There have been significant changes in legislation, especially the 2003 modernisation package, crucial legal judgments have been passed in this area and the Commission has learnt quite a lot from practice, which is also an important aspect.
The Commission opened two rounds of consultations with those concerned, which is good practice in the spirit of legislating well and having public support. The big question now is as follows: what use is it going to make of the responses from those concerned during the consultation? Is it going to take notice of them or are these opinions simply going to be thrown in the bin? In this context, what Parliament and the Committee on Economic and Monetary Affairs want to know is essentially six things. What are the suggestions and specific ideas that the stakeholders have put forward that the Commission is going to take into account when it comes to designing and defining these regulations and taking them from 'the muses to the theatre'?
Secondly, what does the Commission think about the horizontal agreements that are not covered by the exemption regulations on specialisation or research and development. What did the stakeholders say in this round of consultations? What would be the advantages from the point of view of industry, the real economy and protecting competition, of proposing new regulations to take into account horizontal agreements that are not covered by the two block exemption regulations that we are currently considering? Does the Commission intend to draw up new regulations to cover them? Yes or no? The question is relatively clear.
The third problem that was debated at length in the Committee on Economic and Monetary Affairs is the subject of what is known as 'patent ambush', which, as the Commissioner is aware, takes place when one of the stakeholder companies that is participating in establishing standards withholds information on the patents that it holds or the patents that it is planning to register in future. This causes serious damage and inconvenience to those companies that are unaware of that information and commit to acting according to the parameters established.
The question here is relatively specific as this is a case of distortion of competition and barriers in the internal market, which is the cardinal sin in our institution: does the Commission intend to tackle the problem of 'patent ambush' in the framework of the new draft regulations, or otherwise, does it consider that complementary sector-specific legislation would be necessary to avoid abuse of patent rights? Is the Commission committed to ensuring that there is an integrated, consistent legislative framework without internal contradictions between competition rules and sector-specific legislation in the area of intellectual property rights?
The fourth and fifth questions relate to economic governance or, if you prefer, governance of competition. We have learnt that we need to try to converge with other competition authorities and, in this respect, it is important to know to what extent the Commission, in drawing up these regulations, has made use of court decisions and the decisions of national and international authorities.
The last question refers to a subject that is a particularly sensitive one for my committee, and I am sure that Mr Schwab will have something to say about it. It refers to the marketing chain for food products. It seems obvious that there is inequality in conditions among producers, between farmers, on the one hand, and large chains, on the other. Does the Commission intend to do something to guarantee equal, fair treatment for the weaker party in this contract? These are the questions, Commissioner, that I would like to you to answer as fully, clearly and precisely as possible.
Maroš Šefčovič
Vice-President of the Commission. - Madam President, I wish to thank the honourable Member very much for the question, as this is indeed a very important area of responsibility for the European Union.
Competing companies often work together, for instance, in research and development, production, purchasing, product standardisation and information exchange. As you know, this can be beneficial to consumers and lead to lower prices, more choice and better products. These horizontal agreements - we call them horizontal because the cooperating companies are active at the same level in the supply chain - can allow companies to respond to increasing competitive pressures and a changing market place driven by globalisation.
But there is also a risk that this kind of agreement can lead to serious competition problems, for example, where the parties agree to fix prices, share markets or limit output. The Commission has spent the past two years reviewing the competition guidelines for horizontal agreements, with in-depth assessment and wide consultation. The new rules, which should be adopted by the end of this year, will be much more detailed, user-friendly and clear, providing better guidance on what kinds of cooperation are allowed.
As always, the Commission has had to strike a careful balance between the needs of different stakeholders. The two main elements of the new competition rules are on standard-setting and information exchange. In the responses to the public consultation, around two-thirds of stakeholders commented on standardisation.
A well-functioning system for standard-setting is vital for the European economy as a whole and, in particular, for the information and communication technology sector. The horizontal guidelines promote a standard-setting system that is transparent and that leads to predictable costs when licensing intellectual property rights. This requires attempting to find a balance between the sometimes contradictory interests of companies with different business models involved in the standard-setting process. At one end of the spectrum, you have the pure innovator and, at the other, the pure manufacturer, each with different priorities and needs.
The new rules will make sure both that there are sufficient incentives for further innovation and that the traditional benefits from standardisations are passed on to consumers. In order for standard-setting agreements to avoid having to be assessed under the competition rules and to fall within the so-called safe harbour - meaning where they are presumed to be in line with the competition rules - there are three general conditions that need to be met.
The first is that a standard-setting organisation needs to have a balanced IPR policy, requiring good-faith disclosure of the relevant IPRs, and a commitment to licensing these on fair, reasonable and non-discriminatory terms. The second is that the process of standard-setting must be open and transparent so that participation is open to all relevant actors. The third is that the standard-setting process must also be transparent in a way that ensures that stakeholders are able to inform themselves of upcoming, ongoing and finalised work.
You also mentioned patent ambushes. Case experience, both in the EU and in the US, shows that patent ambush can be a real problem by preventing industry from making an informed choice on the potential costs of the technologies chosen in the standard. The Commission approach is to give standard-setting organisations incentives to have clear rules on disclosure of patents. Although this does not completely remove the risk, it does reduce it.
By contrast, for R&D agreements where there are a limited number of parties - often only two - the public consultation showed that stakeholders considered that there is, in practice, no real problem of patent ambush as the parties have an incentive to bring innovations to market and any potential problems can be solved upfront by contractual means between parties.
Turning to information exchange, this can be pro-competitive when it enables companies to gather general market data that allow them to serve customers better. However, there are also situations where the exchange of market information can be misused, for instance, when companies use sensitive information to coordinate behaviour. In response to strong stakeholder demand, the guidelines contain a new chapter setting out general principles for competition assessment of information exchange.
The last question that was raised by Parliament related to the question of purchasing cooperatives. The Commission has consistently believed that joint purchasing groups amongst small retailers can be beneficial for competition, especially vis-à-vis large suppliers. The horizontal guidelines have, since 2000, provided for a positive assessment for this type of cooperation up to certain limits of market share. Following its review process, the Commission is proposing that for purchasing agreements, as long as the market share of participants is 20% or less, it will be presumed to be in line with the competition rules. But the Commission is also aware that international buying alliances among large retailers may have a negative impact on competition, with issues being examined in the context of the Commission's work on a better functioning food supply.
Arturs Krišjānis Kariņš
on behalf of the PPE Group. - (LV) Madam President, Commissioner, none of us likes to pay over the odds for things whose true value we are even unaware of. Similarly, we do not like to pay too much as a result of a dishonourable deal between businesses. Competition policy in the European Union has, hitherto, targeted dishonest businesses. The regulation of horizontal cooperation between businesses is one of the ways in which, to my mind, the Commission is successfully solving the problem of competition where businesses cooperate on matters such as research and development, full exploitation of the volume of production, the distribution of common goods and standardisation. The attention to the question of standardisation in the new rules on business cooperation is welcome. It will allow businesses and sectors to make a clear choice with regard to patents that they wish to make use of. Every standard consists of patents registered by inventors and businesses. In order to introduce a standard, it is necessary to know what precise technological solution is being offered and what consideration the patent holder wishes to receive for the use of his patent. That is why we should support a mechanism in which all interested parties in the course of choosing a standard are clearly aware of the advantages and disadvantages of one invention or another and of the price they will pay for using the patent. We like to make informed choices in our day-to-day lives, and so it is only natural that businesses investing significant funds in the development and manufacture of new technologies with high added value should also wish to make such a choice. To my mind, these new rules on horizontal cooperation between businesses will at least partly help businesses not to pay excessively for making use of patents. Thank you for your attention.
Antolín Sánchez Presedo
Madam President, ladies and gentlemen, competing is not the opposite of cooperating. There are cooperation agreements between companies competing at the same market level that are competitive and in line with the original source of European Union law.
For reasons of legal security, given the complexity of the subject and the balances that have to be achieved, businesses need to have tools to determine what horizontal agreements infringe the prohibitions laid down in the treaty and restrict competition.
This is a critical time, because the guidelines for horizontal agreements are a decade old and the block exemption regulations for specialisation agreements and innovation and development agreements expire at the end of this year. The Union must therefore update these instruments without delay, and cannot afford the luxury of a legislative loophole that generates doubts, uncertainties and paralysis in the activities of our businesses.
This would be an intolerable curb on our economy and hugely irresponsible in the context of a crisis that requires initiatives to help restart and boost business. Moreover, as the timescale for the review is extended to 31 December 2022, they must equip European industry with measures for dealing with the major changes that are going to take place on the international economic stage in the coming years.
A few months ago, the European Union adopted the Europe 2020 strategy, under the Spanish Presidency, which is a firm commitment to an integrative society based on knowledge and innovation. The new legislative framework must promote the development of an intelligent, connected economy that is capable of connecting business networks and taking advantage of the synergies between businesses through agreements promoting standardisation, specialisation, research and development to benefit European consumers, but also agreements that contribute towards joint production, purchase, marketing and promoting cooperatives and business groups, especially among small and medium-sized enterprises.
We support the Commission in using this package of initiatives to increase efficiency, promote scientific and technical progress, provide benefits to end consumers and, in short, improve the overall competitiveness and sustainable development of our businesses.
Sylvie Goulard
Madam President, many things have been said, in particular by my colleagues Mr García-Margallo y Marfil and Mr Sánchez Presedo, about the liveliness of the discussions that we have had in the Committee on Economic and Monetary Affairs, and about the need to adopt reports quickly, as Mr Sánchez Presedo has just said, in order to clarify the scope of operations of our businesses. I will limit myself to two comments which are somewhat more general and political.
Firstly, in all our countries, the crisis has made people withdraw and has given rise to nationalist and protectionist temptations, and we in Parliament are therefore particularly vigilant when it comes to respect for the internal market and its non-fragmentation. There is a challenge here - I can see some colleagues from the relevant committee are nodding. This is very important, and we know that Commissioner Barnier is working towards this, in support of Mr Monti's report. We in the Group of the Alliance of Liberals and Democrats for Europe truly believe in emulation which stimulates innovation.
However, we must also realise that European businesses are in a global competition, and that, in particular for small and medium-sized enterprises and, above all, for research and development, it is particularly important to build bridges, and we need to ensure that competition does not turn into mutual destruction, to the advantage of businesses in other areas of the world which, in addition, do not always practise very fair competition with respect to their competitors. For us, it is therefore very important that we manage to find a means of avoiding abuses of the patent while allowing competition and, of course, while respecting property rights, as has been mentioned. As is often the case, this involves a very delicate balance.
Finally, to conclude, I want to emphasise very strongly that I agree with what Mr García-Margallo y Marfil said about competition in the area of food products. We have a very strange situation in Europe where we look very thoroughly at competition in certain sectors and much less thoroughly in others. It is clear that the lack of proportion between the number of producers and the number of purchasers poses problems of competition. I am therefore delighted, Commissioner, that you have supported what Mr García-Margallo y Marfil said.
Andreas Schwab
(DE) Madam President, Commissioner, allow me to echo what my fellow Members have said and, above all, to welcome the fact that the European Commission is including the business community, the Member States and the European Parliament in the revision of the rules for horizontal cooperation agreements at an early stage; after all, the existing group exemption regulations are due to lapse at the end of the year. I believe that the draft from May 2010 contains some important changes, particularly in the areas of standards and the exchange of information, as already discussed. Both of these will bring greater legal certainty and clearer rules for businesses, something that is extremely important for compliance. We have already heard that compliance in the European internal market is a principle that must be followed by all businesses.
Competition and innovation are key elements for our economy, which is why it is important to adapt the 2009 rules to our present situation and to introduce effective mechanisms to promote compliance and the implementation of competition law for businesses and public bodies. It is for this reason that the parliamentary question was backed by such a large majority in the Committee, something I welcome very much. I would like to ask something about what you have just said. The fact is that the purchasing agreements of large, international chain stores can be categorised as horizontal cooperation agreements. In last year's communication on the functioning of the food supply chain in Europe, you were highly critical of the power of demand, but now you seem to view this very positively. You have just said that cooperation among small retailers is something you welcome, provided the purchasing agreements are in the order of up to a 20% share of the market. My question to you is: what is the reason for this change in how you view these horizontal purchasing agreements? What has motivated this change of heart?
George Sabin Cutaş
(RO) Madam President, first of all, I, too, would like to welcome the European Commission's proposals on the review of the competition horizontal cooperation rules. Their aim is to clarify the terms for obtaining exemptions, readjusting restrictions and providing information about intellectual property rights.
The economic and financial crisis has highlighted the need for closer cooperation in these areas and for a common global economic regulatory framework.
We must also assess the possibility of exchanging information on a more frequent and global level about competition, as well as the possibility of establishing global governance in this area.
Streamlining cooperation agreements between competitors promotes innovation and helps boost European companies' competitiveness.
As a result, I think that an analysis needs to be carried out on the possibilities of introducing, on occasion, block exemption regulations for other horizontal agreement types.
Paul Rübig
(DE) Madam President, I believe that we can organise competition by introducing uniform rules, which is why I am interested to know what options are available to us in the telecommunications sector, specifically in the area of frequency licensing, to enable us to regulate auctions or so-called beauty contests in telecommunications processes. After all, the new technologies available with the fourth generation networks will open up a whole new world of possibilities.
When you travel to a different country in Europe, you will find that many of the prices that appear on your phone's display are the same. Do you have any plans to further stimulate competition in the roaming sector? How do you envisage roaming can be the subject of proper internal market competition and how can you ensure that prices do not jump a thousand-fold when geographical borders are crossed?
Maroš Šefčovič
Vice-President of the Commission. - Madam President, I am very much obliged to the honourable Members for having this debate because it helps us prepare the ground for these very important changes in the legal framework in which our companies will operate in the future. I very much agree with all those who have been calling for fair competition because only fair competition can lead to fair practice and, of course, to real and not fixed prices. This is very important for Europe's citizens: how to create a conducive environment so we can achieve positive results but prevent the possibility, on the market, of fixed prices.
I can assure you that we are looking at all possible ways of achieving a solution under which the prices for the patents would not be too high. You know very well from the debate on this issue how very difficult that is. I can tell you that we in the Commission are very unhappy with the delay - we have not been able to find an appropriate solution for the patent for such a long time - because it would definitely create the conditions for a leap forward on how to protect intellectual property rights and on how to improve and make Europe much more competitive when it comes to patent protection on an international level.
Legal certainty and a new legal framework have been two very important issues on which we have been focusing in preparing our proposals. We have had quite extensive public consultations on this matter. We had 190 submissions and there were stakeholders from industry, law firms, academies and governments, so we think that when it comes to the final outcome, we will have managed to achieve the appropriate balance.
I am very thankful for the underlining of the importance of EU 2020, because this is exactly why we need to improve and change the framework in which companies operate, looking into how to create positive, conducive environments so that research and development companies and companies involved in innovation can flourish, and into how these could bring additional added value to European economies, and into how to create the conditions for their staying in Europe and not looking for opportunities to manufacture the products somewhere else.
I can assure you this was one of the elements on which the Commission, and my colleagues, Commissioners Almunia and Barnier in particular, put particular attention in terms of the Single Market Act. Because with a single market, we now have new opportunities to unlock new potentials, to open new avenues and to create conditions which will be important for really good progress, especially in R&D sectors.
Turning to the concrete questions by Mr Schwab, who pointed out certain differences in the Commission approach to this particular issue of small chain suppliers against large chain companies, we came to the conclusion after a very serious review process and our very extensive consultations with the stakeholders, with the Member States, that the approach we are advocating right now corresponded more closely to the current situation, to the present data we had received, and this was the reason why we are suggesting this line forward.
President
I have received one motion for a resolution tabled in accordance with Rule 115(5) of the Rules of Procedure on behalf of the Committee on Economic and Monetary Affairs.
The debate is closed.
The vote will take place today, Thursday, 25 November 2010, at 12:00.
(The sitting was suspended at 11:30 and resumed at 12:00)
