New R&D Block Exemption Regulation

On 31^st December 2022, the current R&D Block Exemption 1217/2010 ('R&D BE') is due to expire and to be replaced by a new safe harbor regulation which will be supported by guidelines contained within new Horizontal Guidelines to be issued by the European Commission, which are still in draft. The Commission is seeking to extend the life of the existing R&D BE by six months to the end of June 2023.

We provided a summary of the proposals for the new R&D BE, when the draft was first released in March 2022 and our comments are here. This remains the latest version of the draft. Key proposals readers should be aware of are:

1. There will be new market share thresholds. Where the parties to the R&D agreement are competitors at the time of the agreement, the combined market share cap is 25% of the relevant product or technology markets. Similarly, where the R&D agreement is with respect to paid-for R&D, then the market share limit is also 25% of the aggregated shares of the financing party and all the parties funded by the financing party which are engaged in R&D for the same contract products or contract technologies.
2. R&D agreements will be excluded from the benefit of the R&D BE where there are less than three competing R&D efforts in addition to and comparable with those of the parties to the R&D agreement.
3. If the R&D agreement provides for joint exploitation, then the exemption will last for 7 years from launch of the products resulting from the R&D. Thereafter, the exemption continues to apply as long as the 25% market share threshold is not exceeded and, if it is, it still benefits from a further two years exemption.
4. The exclusion of the benefit of the exemption where the agreement contains hardcore restrictions (Article 8), is as expected. It includes: banning R&D in unrelated fields; certain output limitations; certain price fixing arrangements; territorial and active sales restrictions.
5. The Definitions section has been expanded and clarified and there is now a specific section covering withdrawal of the benefit of the exemption by the Commission.
6. Guidance on the R&DBE is provided in Chapter 2 of the new Horizontal Guidelines. There will also be guidance in the Market Definition Notice which is being updated too by the Commission.
7. The new R&D BE, once adopted, will last for 12 years

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.