Seeking comfort: The new EU Informal Guidance Notice
Global | Video | October 2022 | 08:08
Video Details
| Alexandra Rogers |
Hi Richard, good to see you. So, today we will be discussing the European Commission's new Informal Guidance Notice that was published on 3 October. Perhaps we could start by discussing a bit the purpose of that Notice and how it sits with the principle of companies self-assessing their arrangements are compatible with EU competition law. |
| Richard Whish KC |
Well, obviously, we have to go back to Regulation 1/2003, which came into force in 2004. And that was the Regulation that eliminated the possibility of making an application to the Commission for what was called an individual exemption, which is how the system had worked for the previous 40 years. And we entered the world of self-assessment where the Commission says, ok, you're all grown-ups now, you’ve got lots of jurisprudence, you've got lots of block exemptions, notices, guidance, guidelines, you don't need us any longer, you go to your lawyers and your economists and you work out the answer for yourself, including the Article 101(3) question about benefits and consumer share and so on. And I think that was an extremely wise move that the EU made and it has worked very well in practice. But, of course, there are cases where there are, genuinely, novel or unresolved questions where maybe there isn't any guidance, maybe there isn't any jurisprudence, and so the Regulation specifically said, I think it was recital 38, that in appropriate circumstances the Commission may be able to give informal guidance. There was also, of course, Article 10 that said the Commission could grant declarations of inapplicability. So, that was all introduced in 2004, but there's never been any use of these systems until very recently with COVID, which we can come onto perhaps later. |
| Alexandra Rogers | Yes, and the new Notice is not really new is it? In fact, it's an update of the 2004 version. How do they differ? |
| Richard Whish KC | Well, very much so. I've got the new Notice here including tracked changes, what's new, what's extant. And for the most part, actually, the textual changes are just refreshing it, modernising it. Instead of talking about the new Regulation 1 we're, what, 20 years later now. So, there's not a lot, frankly, that's different. What they do say is that in deciding whether there's an EU interest in providing guidance, we will look at the economic importance of the agreement, well that was always there, we will look at the level of investment, that was always there. But we will also look at whether the objectives of the agreement or unilateral practice are relevant for the achievement of the Commission's priorities or Union interest. So, that's new, and we'll talk about sustainability in a moment, but one can see how that provides a hook on which perhaps the Commission might in future provide informal guidance in relation to sustainability agreements. |
| Alexandra Rogers | So, it sounds like there's hopefully going to be a slight broadening, maybe a more flexible approach? |
| Richard Whish KC | Well, yes, as I say, the Notice itself reads pretty much like the old Notice. I think the really important question is, is there going to be an attitudinal change at the Commission? Because they were certainly reluctant, after Regulation 1 came in, to give informal guidance because the whole purpose had been to get rid of individual notification, individual exemption. And I think there was quite a strong feeling that if we start giving informal guidance in lots of cases it's almost like a, sort of, back door reintroduction to notification and exemption, and they've been reluctant to do that. And I respect that, I understand it. However, there are noises I hear around sustainability. The very fact that they've refreshed this Notice, I think it's not so much about what's in it as, is there an attitude change, might the Commission be more willing in the future to give informal guidance? May I add, however, firms can only get informal guidance if they ask for it and I have been told many times by people at the Commission that one of the reasons we never give informal guidance is that nobody ever asks for it, because if informal guidance is given it comes into the public domain, the guidance will be published. In other words, your agreement, or rather your client's agreement, will be in the public domain. And, of course, people don't like that, but then if you want the guidance I'm afraid you have to pay the price, as it were. |
| Alexandra Rogers | So, an area where Commission officials have indicated that they might be willing to give additional informal guidance is in relation to sustainability agreements. That said, with the new Horizontal Cooperation Guidance coming out, that will have a whole chapter on sustainability agreements. And the new Informal Guidance Notice says that where there is sufficient guidance already published, the Commission won't actually give guidance, so how do you see that? |
| Richard Whish KC | Well, I don't think there's any contradiction there. Yes, we will have new guidelines and there will be an entire chapter devoted to sustainability and there's a lot of very interesting stuff in there. But it seems to me that there are… in different sectors cooperation, sustainability, requires different collaborations etc. I'm sure there will be projects that are not convincingly, shall I say, covered by the guidelines, and so I think there will be cases where it will be fruitful to have a discussion with the Commission. Incidentally, those discussions take place even now, discussions. But might there be discussions that lead to informal guidance in this sense? I think it's perfectly possible, indeed Commission officials including Olivier Guersent has said, I think the Commissioner herself has said, we would be open to providing guidance in this very important area. I mean, it is one of the top priorities of the Commission, the Green Deal. |
| Alexandra Rogers | Absolutely. Changing tack a little bit, the same day the Informal Guidance Notice came out, we saw the COVID framework for giving comfort letters was actually withdrawn. Perhaps you could explain what that was? |
| Richard Whish KC | I think that's inevitable and I referred to the pandemic and COVID earlier, or rather I said that there had never been informal guidance, until COVID came along. And there were two comfort letters, guidance letters, call them what you will, sent. One was to Medicines for Europe on 8 April 2020 and that was about cooperation to address the risks of shortages of medicines for victims of COVID, and then the following year there was another comfort letter and that was to do with vaccine and the development of vaccines. And so there you had two examples in the very specific circumstances of COVID of the Commission sending these letters. Well, I am touching wood, COVID I think is behind us, or at least the more menacing aspects of COVID are behind us, so the Commission doesn't really need a position in relation to COVID-type agreements any longer, so it has withdrawn the guidance it had given. But we now enter the world of the new Informal Guidance Notice. |
| Alexandra Rogers | Super. Thank you very much, Richard. |
| Richard Whish KC | Pleasure. |
Partner; Head of Brussels
Email
alexandra.rogers@nortonrosefulbright.com