Comfort Letter

Term common in competition law that usually meant the letter sent by the European Commission in response to most notifications made to it prior to May 2004 on a Form A/B (when new procedures came into force) advising the notifying parties that the Commission saw no grounds for action against an agreement or commercial arrangement as notified under Article 101 of the Treaty on the Functioning of the European Union, because it did not restrict competition or affect trade between member states of the EU (a negative clearance) or that the agreement fulfills the conditions for granting an exemption under Article 101(3) of the Treaty (usually referencing an existing block exemption).

Although such letters were not, and (to the extent that they were issued with respect to an agreement still in force) are not, in principle, legally binding, it would be remarkably difficult for any party to argue that an agreement is illegal under EU law, or that the parties should be civilly liable or fined, if a comfort letter has been issued, unless the complaining party was able to show that significant aspects of the agreement or commercial arrangement had not been disclosed in the notification or had subsequently changed.

The term is also sometimes used to describe reassuring letters sent by other regulatory agencies or authorities in response to a query as to whether an agreement or practice violates applicable laws or regulations. Comfort letters have been replaced under the new European Union competition law procedures with so-called informal guidance letters.

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