New Rules For Licence And Other Technology Transfer Agreements In The EU

Keywords: European Commission, antitrust law, technololgy transfer agreements, life sciences, Technology Transfer Block Exemption Regulation,

The European Commission has just published the definitive text of the new rules on the interface between technology transfer agreements and antitrust law. This article looks at the main changes made by the new law which are likely to have a particular impact on the life sciences industry.

On 28 March 2014, following a public consultation process initiated in February 2013, the European Commission published a revised Commission Regulation EU 316/2014 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to categories of technology transfer agreements (the so-called Technology Transfer Block Exemption Regulation) with accompanying guidelines. The new rules will enter into force on 1 May 2014 and replace the previous regulation (EC 772/2004) and accompanying guidelines, which will expire on 30 April 2014.

The new Regulation will apply not only to new technology transfer agreements entered into from 1 May 2014 onwards but also, as of 30 April 2015, to agreements concluded under the old regime.

The Regulation provides a safe harbour under Article 101(3) of the EU Treaty that prevents licence agreements being challenged under Article 101(1) of the EU Treaty (the prohibition of anti-competitive agreements). While the main principles underlying the Regulation remain the same, certain changes are worthy of notice.

Main changes with particular relevance for the Life Sciences industry:

Market share

Under both the new and the old Regulation, the safe harbour applies where the parties' combined market shares are below 20% if they are competitors, and 30% if they are not.

Under the new Regulation, the basis for calculating the licensor's market share has been clarified: it will now be based on the sales data for the products produced by the licensor and all its licensees combined, in the relevant geographic area.

This change is likely to particularly affect the life sciences sector, where it is often difficult to calculate market share. A single product may constitute a single market, and so mean that the licence does not benefit from the exemption. Calculating market shares on the basis of sales data is also problematic in the biotechnology industry, because innovations often originate in small- and medium-sized enterprises (SMEs), which do not have the resources or expertise...