Agreements on specialization in production allow undertakings to concentrate on the manufacture of certain products and thus operate more efficiently and supply the products more cheaply.

Regulation No 1218/2010 distinguishes between three types of specialization agreement :

– unilateral specialization agreements between two parties active in the same product market by virtue of which one party agrees to fully or partly cease production of certain products or to refrain from producing those products and to purchase them from the other party, who agrees to produce and supply those products;

– reciprocal specialization agreements between two or more parties which are active on the same product market, by virtue of which two or more parties on a reciprocal basis agree to fully or partly cease or refrain from producing certain but different products and to purchase these products from the other parties, who agree to produce and supply them;

– joint production agreements by virtue of which two or more parties agree to produce certain products jointly.

The Commission considers that agreements on specialization in production contribute to improving the production or distribution of goods if the parties have complementary skills, assets or activities. It consequently gives them the benefit of a preferential treatment by exempting them from the application of Article 101(1) TFEU provided that the combined market share of the participating undertakings does not exceed 20% on the relevant market (Regulation No 1218-2010, Art. 3). The market share is calculated on the basis of the market sales value or, if market sales value data are not available, estimates based on other reliable market information, such as market sales volumes on the basis of data relating to the preceding calendar year (Art. 5).  If the market share is initially not more than 20% but subsequently rises above that level without exceeding 25 %, the exemption continues to apply for a period of 2 consecutive calendar years following the year in which the threshold was first exceeded. If the threshold initially not more than 20 % but subsequently rises above 25 %, the exemption continues to apply for one year following the year in which the level of 25% was first exceeded. The block exemption applies to restrictions ancillary to specialization, such as exclusive purchase and/or exclusive supply obligations (Art. 2). It defines the hardcore restrictions for which the exemption cannot apply: price fixing, market sharing or output limitation (Art. 4). However, this does not apply to provisions on the agreed amount of products in the context of unilateral or reciprocal specialization agreements or the setting of the capacity and production volume in the context of a joint production agreement.