EU competition law and joint production agreements
Produced in partnership with K&L Gates

The following Competition practice note produced in partnership with K&L Gates provides comprehensive and up to date legal information covering:

  • EU competition law and joint production agreements
  • What is a joint production agreement?
  • Underlying competition law principles and main competition concerns
  • Framework for assessing joint production agreements under EU competition law
  • Application of specific assessment criteria under Horizontal Guidelines
  • Assessment under Article 101(1) TFEU
  • Assessment under Article 101(3)TFEU

EU competition law and joint production agreements

Joint production agreements, whereby two or more parties agree the terms under which a product may be produced, are capable of giving rise to significant benefits for consumers and markets. For example, by producing goods together, companies can save costs that can be passed on to customers. Producing jointly can also help companies pool their complementary skills and know-how, or jointly invest more than they would be able to individually, thus leading to improved product quality or variety.

However, in certain circumstances joint production agreements can also give rise to serious competition law concerns, in particular where the parties have significant market power.

What is a joint production agreement?

Joint production agreements vary in form and scope, and can provide that production is carried out by only one party or by two or more parties jointly.

Where production is carried out jointly by two or more parties, this can be by way of either a joint venture (ie a jointly controlled company) or under a looser form of cooperation, such as a so-called 'subcontracting agreement', which may be horizontal or vertical in nature.

Under a horizontal subcontracting agreement, one party (the 'contractor') entrusts to another party operating at the same level of the market (the 'subcontractor') the production of a product. The parties need not be actual or potential competitors for the agreement

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