What Is It Called When A Group Of Producers Creates A Formal Written Agreement

The outsourcing of captive research and development is a specific form of research and development cooperation. In such a scenario, research and development is often carried out by specialized companies, research institutes or academic institutions that do not participate in the exploitation of the results. Normally, these agreements are combined with a transfer of know-how and/or an exclusivity clause on possible outcomes which, in such a scenario, do not have restrictive effects on competition within the meaning of Article 101, paragraph 1, because of the complementary nature of the cooperating parties. When, in a given market, oligopoly companies decide how much they produce and the price they charge, they are tempted to act as if they were a monopoly. Joint action allows oligopolistic companies to maintain industrial production, demand a higher price and share profits. If companies work together in this way to reduce production and keep prices high, it is called collusion. A group of companies that have entered into a formal agreement to produce monopoly production and sell it at the monopoly price is referred to as an agreement. A more detailed analysis of the difference between the two can be seen in Clear It Up below. Situation: two supermarket chains enter into an agreement for the joint purchase of products representing about 80% of their variable costs. In the purchasing markets involved for the different product categories, the parties hold a combined market share of between 25% and 40%. In the market in question, they hold a combined market share of 60%. There are four other major retailers with 10% market share each.

Market entry is unlikely. Production agreements can result in direct restrictions on competition between the parties. Production agreements, particularly production joint ventures, may encourage parties to directly align the level of production and quality, the price at which the joint venture sells its products or other competitive parameters. This can also limit competition if the parties market the products independently. Many research and development agreements will be somewhere between the two situations described in points 137 and 138. As a result, they can have an impact on innovation and effects on existing markets. Therefore, both the existing market and the impact on innovation can be important for the evaluation of combined positions, concentration ratios, number of players or innovators and entry requirements. In some cases, there may be restrictive effects on competition in the form of higher prices or quality of production, product diversity or innovation in existing markets, and negative effects on innovation by slowing development.

For example, if major competitors in an existing technology market cooperate to develop a new technology that could one day replace existing products, cooperation could slow the development of the new technology if the parties have market power in the existing market and a strong research and development position.