Where collective rather than individual action is deemed optimal, parties might agree restraints or obligations deemed necessary to protect an investment in relation to, for example, the development of a geographic market, a technology, a production plant or an industrial process or to increase the parties' purchasing power vis-à-vis a powerful supplier. More commonly, restraints may be required simply to facilitate day-to-day business activities such as distribution or supply/purchasing arrangements.
However, where such an agreement is determined to have a restrictive 'object' and/or shown to produce appreciably restrictive 'effects' within the meaning of Article 101(1) TFEU, the agreement will be illegal unless the contracting parties can benefit from an exemption under Article 101(3) TFEU—either by bringing the agreement within the safe harbour of a potentially applicable block exemption or by explicitly justifying the arrangement on 'efficiency' grounds.
See further, Individual exemptions under Article 101(3) TFEU.
Article 101(3) TFEU applies to categories of agreements by way of 'block exemption' regulations adopted by the European Commission (the Commission). The block exemption regulations establish ‘safe-harbour’ regimes whereby agreements will be considered legal and enforceable provided that they meet the specified
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