Brussels, 13/04/2004 (Agence Europe) - As we announced earlier, the European Commission has adopted new arrangements for application of competition policy to technology transfer agreements (granting patent licenses, know-how and software copyright), in the aim of reducing red tape and increasing legal security for businesses. This system is part of the broad reform undertaken by the Commission with regard to the competition rules which are to take effect on 1 May this year.
Licensing agreements are in theory prohibited under competition rules (Article 81 of the Treaty on Agreements). Although they do allow economic development and increase the wellbeing of consumers in so far as they contribute to the diffusion of innovation and the use of complementary capacities by companies, they can also be used for anti-competitive purposes, for example when two competitors use them to share markets between themselves or when a major license holder excludes all rival market technologies. The European Commission had thus to strike a balance between protecting competition and protecting intellectual property rights. The new provisions that it has adopted aim to achieve just this. They are composed of a block exemption regulation and guidelines.
The regulation creates a safe harbour for most licensing agreements whereas the guidelines specify how Article 81 should be applied to the agreements which do not fall within the scope of the safe harbour. The aim is to replace a previous group exemption regulation (1996) the scope of which was too narrow and formalist. From now on, companies will have greater freedom to conclude agreements depending on their commercial needs, the Commission insists. The safe harbour does not, however, extend over and beyond a certain threshold of market shares: 20% for licensing agreements between rival firms and 30% for agreements between non-rivals. Other features of the regulation include a "black list" of hard core antitrust restrictions, in order to systematically exempt everything which is not explicitly excluded from the regulation. This approach is different from that foreseen in 1996, which provided for a "white list" and a "grey list", making the analysis more complicated. The scope of the new rules is also extended, since these no longer cover only patent licensing and know-how but now also apply to rights relating to designs and models and to software copyright licenses, in accordance with the wishes expressed during the consultation period with interested third parties.
Commissioner Monti welcomes this new regulation, which will boost the European economy. "By giving more encouragement to innovation while focusing on restrictions that are highly detrimental to competition, competition policy may play a major role and give EU economies fresh dynamism, thus helping to respect the commitments taken in Lisbon ", he said. (The complete text of the new regulation may be consulted at the following address: http: //europa.eu.int/comm/competition/whatsnew.html)