RBB

7 January 2004

Art or Science? Assessing efficiencies under the Commission’s Article 81(3) Notice

As part of its “modernisation” programme, the EC Commission has published a Notice

on the principles that govern whether an agreement should be granted an exemption

under Article 81(3).1 Under the reforms, exemptions can now for the first time be granted

by national competition authorities, and parties to such agreements are now required to

undertake their own legal assessment since it no longer remains open to them to notify

their agreements to the Commission.

The Notice describes a framework for the economic analysis of how an agreement

that is held to restrict competition may nevertheless be lawful because it meets the four

efficiency defence criteria of Article 81(3). The framework seeks to follow the approach

taken on efficiencies in horizontal mergers: first, establish whether there is a likelihood

of increased prices; then, if so, evaluate the existence of offsetting efficiencies. As we

explain in this Brief, however, there are several difficulties in extending this framework

from mergers to the assessment of agreements.

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