Brussels, 08/01/2002 (Agence Europe) - The European Commission has adopted a report to evaluate the functioning of Regulation No. 240/96, which sets out the competition rules for the application of Article 81(3) on technology transfer agreements. In opening this debate, the Commission hopes to encourage businesses to innovate in the area of new technology and disseminate these ideas on a large scale. Competition is one of the main driving forces of innovation and it is therefore important to find the right balance between protecting competition and protecting intellectual property rights.
Whereas Article 81 (1) of the EC Treaty prohibits agreements which may affect trade, Article 81(3), an anti-competitive agreement may be exempted from the prohibition of Article 81(1) if the positive effects brought about by the agreement outweigh its negative effects. This provision means that the Commission was able to adopt Regulation No. 240/96 in 1996, which effectively blocked exempt categories of agreements for certain licensing agreements by way of adopting the technology transfer block exemption. The report the Commission has just adopted provides a critical analysis of the application and the policy approach underpinning the technology transfer block exemption (TTBE) system. It discusses the problems arising in the context of licences of intellectual property rights ('IPRs') and acknowledges the complementary role of competition and innovation policies. It also contains a comparison between the competition policy approach to licensing of IPRs in the Community and in the US. It stresses the need to adapt the TTBE system to the economic fundamentals in place. Four basic shortcomings have been identified: 1) the TTBE is too prescriptive and seems to work as a straitjacket, which may discourage efficient transactions and hamper dissemination of new technologies; 2) the TTBE only covers certain patent and know-how licensing agreements. This narrow scope of application of the TTBE seems increasingly inadequate to deal with the complexity of modern licensing arrangements (e.g. pooling arrangements, software licenses involving copyright); 3) a number of restraints are currently presumed illegal or excluded from the block exemption without a good economic justification. This concerns in particular certain restrictions extending beyond the scope of the licensed IPR (e.g. non-compete obligations, tying). In terms of economic analysis, such restraints may be efficiency enhancing or anti-competitive depending on the competitive relationship between the parties, the market structure and the parties' market power; 4) by concentrating on the form of the agreement the TTBE extends the benefit of the block exemption to situations which cannot always be presumed to fulfil the conditions of Article 81(3), either because the contracting parties are competitors or because they hold a strong position on the market. For instance, the granting of an exclusive license can have serious foreclosure effects when an exclusive license is granted to a dominant producer which prevents other companies gaining access to technology that might foster their market entry.
In its report, the Commission invites comments on a number of issues relating to the competition policy it is pursuing on licensing agreements. The Commission hopes therefore to be able to adopt a more lenient approach to licensing agreements between non-competitors, which generally enhances pro-competitive practices, and adopt a more prudent approach to licensing agreements between competitors, which may give rise to a number of competition concerns if they establish a division of the markets into different market and client segments. When the commission's examination is completed, it should be able to outline a new set of rules in the sector in the second half of 2002. The report can be consulted at the following address: htt: //europa.eu.int/comm/competition/antitrust/technology transfer/.