EU: The Informal Guidance Notice: a second life?

The original Notice was adopted in 2003 at the same time as Regulation 1/2003, recital 38 of which allowed the Commission to issue guidance to businesses in cases that give rise to genuine uncertainty because they present novel or unresolved questions about the application of Article 101 or 102 TFEU. Although the informal guidance procedure has been around for 20 years, it was never utilised, and its revision is a welcome development aimed at incentivising the use of informal guidance letters by which the Commission can offer non-binding guidance in response to queries from undertakings. The Notice may have the result of allowing such guidance to be issued in more cases and provide some clarity to companies going forward.

Although there have been previous calls by the Commission for businesses to seek informal guidance, particularly in the context of sustainability-related cooperation initiatives, this instrument has not been used. In part, this may be because the circumstances under which undertakings could apply for informal guidance were too narrow in scope. It may also be due to some hesitancy on the part of the Commission that heavy reliance on the informal guidance mechanism would amount to the re-introduction of individual exemptions “by the back door”.

The COVID-19 pandemic, however, highlighted the urgency of offering guidance and legal certainty to businesses, particularly those operating in critical sectors such as pharma, leading the Commission to issue its first comfort letter in 20 years to Medicines for Europe in respect of a cooperation project to address the risk of shortages of critical hospital medicines for the treatment of COVID patients. The second comfort letter was issued to Ecorys and SPI to cooperate in the production of vaccines.

Although the proposed revised text does not introduce radical changes, it is certainly a sign of the Commission’s increasing willingness to re-sharpen and future-proof its existing tools to make them more “operational” and more capable of offering legal certainty to businesses.

The first key change to the Notice establishes the framework for assessing whether issuing a guidance letter by the Commission is appropriate. Some of the other noteworthy changes including those as a result of the consultation on the Notice are:

• Introduction of relevance for Commission priorities or Union interest: the Commission may consider whether the objectives of an agreement or unilateral practice are relevant for the achievement of the Commission’s priorities or Union interest. This is particularly of value in cases, such as sustainability and digital markets.
• Actual or potential economic importance: the Commission has changed the requirement for it to assess the economic importance of the relevant products or services to a wider standard that considers “the actual or potential economic importance of the goods and services concerned,” particularly considering the interests of the consumers.
• No sufficient clarity: guidance is now possible in cases where there is “no sufficient clarity” (as opposed to the previous requirement of “no clarification”) in the existing Union legal framework to meet the criterion of “novel or unresolved question.”
• Requirement to provide added value: parties are not “entitled” to receive any such guidance under the Notice but must show that a public clarification of the applicable law would provide “added value” with respect to legal certainty.
• Ex-ante informal and confidential approach: prior to any formal submission of the request for a guidance letter, the undertaking(s) may contact DG Competition to discuss their intended submission informally and in confidence.
• Reaction within reasonable time: the Commission will use its best efforts to inform the applicant(s) of the course of action that it intends to take within a reasonable time.
• Fines: the Commission will not impose any fines on the applicant(s), with respect to any action taken by the applicant(s) relying in good faith on the Commission’s guidance letter. However, if public interest requires, the Commission can modify or revoke a guidance letter.

Only time will tell whether the Commission’s willingness to offer a more flexible and accessible process to obtaining informal guidance is a success or is again a dead letter.

For more information please contact Jose Rivas or Olga Markarian and visit our Competition & EU homepage.