Cooperative agreements in R&D and European antitrust policy

Cooperative research and development (R&D) agreements are an alternative to either pure market transactions or integration within a firm under a single administrative structure. They can accelerate the speed of invention and innovation with less risk, and the pooling of resources can provide financial capital at better conditions. However, partner selection and the possibility of defining will-balanced contributions is an important barrier, as is the management of existing agreements and the sharing of benefits. The main argument in favor of socially beneficial effects of cooperative research is based on a problem of the absence of complete appropriability of returns. However, cooperative R&D could lead to a harmful reduction of competition. There are more obstacles to cooperative R&D than to collusion in other areas in spite of the positive social welfare effects. Regulation 418/85 grants a 13-year block exemption under Article 85 of the Treaty of Rome to categories of R&D agreements.